Dayang's longer-term uptrend remains largely unscathed evenafter its steep price decline in 2011 in tandem with the broader market. Thesubsequent rally brought it right back to  the significant RM2.20resistance level, which if successfully violated should see the stock continueon its longer term uptrend.

Dayang  was one of themarket outperformers during the broad market rally in 2009-2011,  during which the stock  price more thanquadrupled  from its 2008 low. Thestock's long-term upward bias had remained unfazed although it was not sparedthe market selloff last year. During the 6-month pullback, the stock retracedby about 50% of the 2009-2011 rally, which is positive for an upward trendbased on Fibonacci analysis. The stock has rallied since then and is now backabove the 50-week MAV line, which is about to turn up again.

The 5-month rally has propelled the stock right up to  the resistance level of RM2.20. Although itsall-time high is around RM2.50, the RM2.20 level is deemed a more significantresistance as the stock only managed to close above this level once on a weeklybasis. This level is also the high of late 2010, April 2011 and the past two weeks.

Therefore, the continuation of the longer-term uptrendshould be confirmed if the stock convincingly closes above RM2.20. The stock isexpected to trade higher and  a  position can be initiated  when this happens, with a stop on a  close below RM1.90, which is aprior support level and also the covered gap of 12 Aug. The initial target isthe all-time high of RM2.50, while a strong move may see the stock test thepsychological RM3.00, a measured move based on the pullback of 2011.

However, the upward bias will  dissipate if  the stock fails to violate theresistance level  at  RM2.20, while a close below RM1.90 could see it trading sideways instead. Strongsupport is, of course, at RM1.40, which if violated may signal the end of the3-year rally.

Source: OSK188