SEG International has spent the last one year consolidating the impressive 1'' -year rally thatstarted in early 2010. Intermediate-term support is indentified at RM1.66 andthe uptrend will be intact as long as the level holds. However, a violation  may spell the end of the  rally, confirming the weakness seen from themultiple failed breakouts from theRM2.00 level.

The stock was one of the market outperformers during therun-up towards  the  July 2011 high.  The rally chalked up an impressive gain fromthe low of RM0.17 in early 2010 until the test of RM2.00 in 2011. Since July2011, the stock has been trading sideways, which saw its price being capped bythe psychological resistance of RM2.00 and supported above the 1-year low ofRM1.66. Nonetheless, the longer-term trend is intact, as seen from the seriesof higher lows at RM1.00 and RM1.66. However, the four failed tests of the psychological RM2.00 in thepast  one year  have  certainly dampened the upward bias. It raisesthe possibility of the formation of a topping pattern, where the distributionprocess was carried out during the consolidation phase. The current price ofbelow the converging MAV lines does not help the uptrend either. A convergenceof multiple MAV lines, in this case at RM1.85, sometimes indicates the pivotalpoint that brings about a change in trend.

Therefore, to keep the longer-term trend intact, the stockhas to find support above RM1.66. This requires a positive response to the'Long White' candle of 30 March. The high volume achieved that day also pointsto a return of buying support. Thus, positions can be considered as long as thestock trades above RM1.66 with a close above RM1.85, also the high of the 'LongWhite' candle,  the requiredconfirmation.  The price target isRM2.35, based on  the 1-year sideways range,provided that the psychological RM2.00 is violated convincingly.

However, positions will look increasingly untenable if the stock fails to break RM1.85, with aclose below RM1.66 confirming the technical weakness. A successful violationwill likely end the 2-year rally and strong support is expected at RM1.35,retracing 38% of the 2010-2011 rally and just below the 62% retracement of theDec 2010-July 2011 rally.

Source: OSK188