DAILY TRADING STOCKS: Sanichi Technology, Naim Indah

Sanichi’s daily chart

Sanichi may trade higher after the firm move yesterday. The stock was in correction mode after reaching its peak in Dec 2011. In fact, the correction was rather severe as it has retraced more than 62% of the Oct-Dec rally. But the quick rebound back above the broken support level  of RM0.12 two weeks ago  has suggested a false breakdown and a return of buying support.  Buying should be confirmed  by the highest close in more than a  month yesterday, especially with the heavy buying volume. Thus, a new up-leg to the rally can be reasonably expected. Purchases can be made above the one-month high of RM0.135 with a close below RM0.12 as the stop loss.  The price target is the prior highs of RM0.20 and RM0.25, provided that the February-high of RM0.165 is convincingly broken. The upside bias is neutralized if the stop loss is triggered and weakness is confirmed on a close below  the  recent low of  the psychological RM0.10. This should signal the end of the rally that started in Oct last year.

Naim Indah’ daily chart

Naim Indah needs to break above the short-term resistance level to keep uptrend intact. The stock was highlighted early in the month as it was likely to climb higher. Our interest was trigerred by the extension of the series of higher lows, with the latest one at the early April-low of RM0.43. The stock rallied for  two days but soon went  into a tight consolidation.  It has been trading between RM0.515 and RM0.575 for the past 7 days.  In fact, the sideways move carries a slight negative bias from the “Upper Shadow” that accompanies the candles. Nonetheless, a prudent trade should wait until a breakout before taking action. Given the uptrend, an upward continuation is still expected and this will be confirmed by a close above RM0.575.  Positions can be initiated if  this happens with a stop loss on close below RM0.515.  Resistance remains at RM0.70 and a  successful violation of  this level  could see the stock testing the psychological RM1.00 mark. But look  for the stock to trade lower should it close below RM0.515, while a close below RM0.41 should confirm the weakness and may even spell the end of the 3-month uptrend.

Source: OSK188