DAILY TRADING STOCKS: Scomi Group, AirAsia

Scomi’s daily chart

Scomi may trade higher after the firm move yesterday. The stock has been on a downtrend since peaking in 2007. Nonetheless, the significant easing of downward momentum in the past year may herald a change in trend.  Buying support is also seen from the stock’s ability to hold above the Sept low of RM0.25 for the past 6 months. A new upleg, at least a correction to the Feb-March decline, could be on the cards after the firm move yesterday, which saw the stock closed the highest in 3 weeks. The high volume recorded yesterday also suggests a return of market interest. Thus, purchases can be made above the 3-week high of RM0.275, with a stop loss on close below RM0.25. The price target is the recent high of RM0.32, followed by the 52-week high of RM0.34. A violation of both levels could see the stock move higher and possibly reaching RM0.41, based on the width of the past 1-year sideways move. The upward bias is nullified should the stop loss be triggered, after which expect the stock to continue its 5-year long decline.

AirAsia’s daily chart

AirAsia’s share price may rally further if it can build up on the positive candle yesterday. The stock was highlighted in our previous report on its possibility of trading lower after the successful breakdown of the 5-month support level in late March. The expected selloff, however, did not take place. In fact, the stock managed to find support just above the recent low of RM3.34 yesterday and went on to close on a “Bullish Engulfing” candle. The surprise change of event signals the lack of follow-through selling, and this may herald the return of buying. Thus, purchases can be made above the prior 2-day high of RM3.42 with a close below RM3.34 as the stop loss.  A more conservative trade may involve waiting until a close above RM3.55 before entering. This would see the stock back above the rising 200-day MAV line. The price target is RM4.00, which will see it at a 6-month high and then the 2011-high of RM4.20. A successful violation of RM4.20 will see the stock continuing its longer-term uptrend. The upside bias is erased should the stop loss be triggered, after which look for the stock to trade lower, with support expected at RM3.10 and the Sept-low of RM2.70. A violation of RM2.70 will likely see the longer-term trend turning down.

Source: OSK188