EYE On STOCK, nOTIOn vTEC

NOTION VTec Bhd (code: 0083) has been making a rebound over the last week after bouncing off a support of 55 sen on Dec 19.

While there may be short-term gains in store, a breakout doesn’t look likely as buying volume remains low although some pick up may be seen post-holiday season, which would help add to the momentum.

The stock’s attempt to gain higher ground was thwarted in November when the share price formed a double peak, triggering a slide that returned it to July levels of trading.

For 2018, the counter has been capped by the resistance at 79.5 sen, which has prevented it from returning to higher trading ground pre-dating the massive selloff in October 2017. Looking at the short-term daily price chart, the stock aims to sustain its rebound over the near term.

On Friday, the share price breached the immediate resistance of 60 sen, which was also the 14-day simple moving average (SMA). It has to attempt a crossing of the 200-day SMA and breach the next resistance at 63.5 sen.

A positive crossing of this mark would be a bullish development although some fading momentum in the slow-stochastic momentum index may be indicating a brief pause in the ascent. The per cent K oscillator has bounced off the overbought line and is returning to lower levels at 68 points. It has made a negative crossing of the per cent D oscillator, which would suggest profit-taking pressure.

However, the daily moving average convergence/divergence line is coming to a bullish crossing with the signal line, which indicates the resumption of a positive trend.

The 14-day relative strength index is moving higher at 41 points, posing a stronger entry level for investors as it approaches the neutral area. There is a tight convergence of the key SMAs in the space overhead, with the uppermost 100-day SMA resting at 66.5 sen, which is a key level for the stock as it represents a 23.6% Fibonacci retracement for the stock following its Oct 2017 descent.

This suggests strong resistance levels in store but looking at the price chart, successful challenges of the resistance were seen throughout August to November.

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