SUPPORTLINE By FONG MING YUAN

NOTION VTec Bhd has faced a slew of bad news since it hit its recent peak of RM1.34 on May 9 this year. That topping out of its share price marked the end of a seven-month uptrend and its entry into consolidation made. By Oct 19, the counter had pulled back to a Fibonacci support level of 38.2% at 96.5 sen. This, however, was just the start of its misfortune as the company suffered a fire outbreak at its manufacturing facility in Klang, creating a huge drop in its share price on Oct 20 to an intra-day low of 65 sen. The stock continued to trend lower, and again at an accelerated pace in the final week of November as the company recorded weak earnings. However, the counter appeared to have finally hit bottom on Dec 6 at 45.5 sen. Over the next five trading sessions, there was a technical rebound, taking the stock to an intra-day high of 62 sen on Wednesday. There was also a concomitant rise in trading volume, suggesting that buying interest had returned to the counter. The technical indicators certainly look healthier than they have been in a while. The slow-stochastic momentum index made a beeline for the overbought line on Wednesday, but it could push further in extended overbought mode at 84 points. Meanwhile the daily moving average convergence/divergence histogram had triggered a “buy” signal. However, the indicator remains in the negative area of the chart, where it has been since August this year. A rise into positive territory would be clear indication of a resumption of an uptrend. The 14-day relative strength index shows good momentum at 72 points. The counter continues to face heavy resistance from the simple moving averages. While it managed to pass the 14- and 21-day SMAs after the recent rise, a Fibonnaci resistance level of 23.6% at about 66 sen poses as a hurdle. This is further complicated by the nearby 50-day SMA pegged at 70 sen, which suggests the counter will face strong resistance within that range. A breach of the 50-day SMA will see the stock head for the 100-day SMA at 90 sen, while a crossing of that hurdle that will put the counter in good stead to resume trading at pre-fire-incident levels. Support for the counter is pegged at the recent low of 45.5 sen with a fall through that could see it trading at November 2016 levels at 37 sen.

The comments above do not represent a recommendation to buy or sell.

Note: This article first appeared in StarBiz Premium yesterday.