DXN had a major breakout above the DTL channel of RM0.60 in 2009 and later surpassed the neckline resistance of RM0.78 following the robust 1QFY11 results release on 28 July. DXN’s share price closed at 6-year high of RM0.91 yesterday and are marching steadily towards the upper UTL channel of RM1.00.
A breakout above RM1.00 will signal more upside to the significant neckline resistance level of RM1.10, followed by historical high of RM1.30 (30 Sep 03). The upside is also supported by a bullish crossover of the 50-d SMA above the 100-d SMA.
However, as share price already surged 26% since 28 July, we anticipate profit taking activities amid the overbought momentum readings. Strong support can be found at RM0.88 (38.2% FR from historical high/low of RM1.30 and RM0.20), RM0.85 (5-d SMA) and RM0.81 (10-d SMA). Our cut-loss point is pegged at below RM0.80.
ACCUMUALTE around RM0.85-0.88 levels, with a 6-month technical target of RM1.36, implying 8.2x (about 25% discount to industry P/E of 10.9x) on 16.6sen FY11 EPS.
From :HLeBroking Research
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