Globetronics could be in its initial  uptrend  phase after confirming a higher low lastmonth.  The high volume that accompaniedthe rise adds stronger conviction to the rally, which is likely to end thelong-term downtrend.

The stock's downtrend since early 2010 could be over afterthe steady rise in the past four months. The downtrend is quite pronounced,  as illustrated by the lower highs  right up to Jan 2012. The  gradually descending  200-day MAV line  also indicates the same negative trend.

But things took a turn in January as the price rallied for acouple of days and printed a 6-month high. The move was also accompanied by significantvolume,  the highest in almost 2 years,which is a sign of  firm buyinginterest.  The rise was preceded byeasing downward momentum, which led to a false breakdown in Dec 2011. Theinability of a new low to elicit further selling was a telling sign that thedowntrend may end. This upward move was soon confirmed by a new rally high beingset in March. Note that the 'Golden Cross' occurred in late March and the50-day MAV line crossing above the 200-day MAV line is usually taken as alonger-term positive indication. Furthermore, the 200-day MAV line is risingtoo. 

All these factors point to a higher price and a good upwardcontinuation should not see the stock closing below RM1.08, the brokenresistance and also the high of January. Thus, purchases can be made at  the current level or on a pullback towards the stop-loss level of RM1.08. Amore conservative trader may opt for a close below the psychological RM1.00 as the  stop loss. The price target is RM1.37 and a strong rally could even see  the stock testing the psychological RM1.50, providedthat the 1'' -year high of RM1.26 is successfully violated. All three resistance levels coincide with  the Fibonacci levels of the 2010-2011decline.

However, a close below RM1.00 will significantly reduce thepossibility of an upward continuation. Strong support should come at theFebruary-low of RM0.92, a violation of which will likely signal the end of the4-month rally.

Source: OSK188