SUPPORTLINE by FONG MIN YUAN

DANCOMECH Holdings Bhd remains on an uptrend after having jumped by 35% since Nov 1. Last week, the stock underwent a brief correction, but returned to a bullish trajectory on Monday. On Tuesday, the share price hit an intra-day high of 53.5 sen, which was a positive crossing of the immediate resistance of 52.5 sen, representing a high hit on Nov 22 before the stock entered into a correction. Over the ensuing trading sessions, profit-taking may keep the share price flirting with a pullback. However, it looks to be a matter of time before the stock resumes its advance given the bullish trend line and rising momentum.

The slow-stochastic momentum index has risen sharply to 62 points, paving the way for more growth. The 14-day relative strength index rests on the overbought line at 70 points and remains healthy. The daily moving average convergence/divergence line is also afloat of the signal line, indicating that the uptrend remains intact. Subsequent advances ahead of the 52.5-sen mark will open the gates for the bulls to roam towards a significantly higher resistance of 58.5 sen. Trading volume on the counter remains healthy, with Tuesday’s volume being the highest since Nov 21. This suggests that investor interest remains intact – lending weight to a breakout. In the event the share price subsides below the resistance-turned-support, the stock could descend on profit-taking towards the trend line at 48 sen, which meets the 14-day simple moving average (SMA). A convergence of the 21-day and 50-day SMAs at the 46.5 sen line also serves as a buffer, with a negative crossing indicative that this rally has lost its footing. More concrete support rests at 45 sen.

The comments above do not represent a recommendation to buy or sell. Note: This article first appeared in StarBiz Premium yesterday.