EYE On STOCK

SINO Hua-An International Bhd (code: 2739), which has seen its share price slip since January this year, is facing a long uphill battle to return to a bullish outlook.

On Thursday, the stock showed some signs of life when it returned to a positive trajectory, and this increase in momentum followed through yesterday.

Nevertheless, at present there is not enough evidence that this return to a positive trajectory will be sustained over the next few trading days, given the stiff resistance faced by the stock as well as the well-established descending trend line drawn over the course of this year.

There are some nearby immediate hurdles abovehead that the share price appears to be aiming for over the immediate term.

Hovering above yesterday’s trading high of 27.5 sen is the 50-day simple moving average (SMA) at 28 sen and the 100-day SMA at 29 sen.

There have been breaches of these resistances over recent months, with the latest successful and convincing crossings coming in July when the stock spiked above the key SMAs. Nevertheless, failing to break through the negative trend line, the stock succumbed to the negative pressure shortly after.

A return to the bulls this time would require a positive breach of the 38-sen mark, which meets the uppermost 200-day SMA, although the target remains out of arm’s reach at the moment.

A good trading strategy may be capitalise on any upsides between yesterday’s closing price and the 28 to 29-sen mark.

The recent low of of 22 sen represents the starting point of a steep rally that took place between December 2017 and January 2018. Given the 100% retracement of the stock to pre-rally levels, the 22-sen mark serves as a solid support.

The momentum indicators suggest some near-term upsides. The slow-stochastic momentum index has risen closer to the overbought line at 75 points. The 14-day relative strength index has also crossed the 60-point mark in a bullish development.

Meanwhile, the daily moving average convergence/divergence line has pushed past the signal line to give a “buy” signal.

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