The share price of UOA development has been trending lowersince its debut in June 2011. However, the downward momentum has easedrecently, possibly due to accumulation at these low levels. This may lead to achange in trend but more is still needed to confirm the end of the downwardtrend.

We featured UOA Development late last year in anticipationof a change in trend. An expected and apparent upward move did not happen butthe sideways move since the low in Dec 2011 still keeps this possibility alive.To recap, accumulation is likely to have taken place during the bottom of Oct2011, as seen from the heavy volume for the stock. Buying support is also seenfrom the series of higher lows, at RM1.15, RM1.30 and RM1.40. The stock hasalso responded well to the buying support at the latest bottom in early April,as it had closed at the highest level in more than 3 months.

However, the upward bias seen in the past  six months remains unconfirmed as the stockhas yet to make a higher  high, despitethe rising trend of the broader market in the past four months. Thus, the stockhas to violate the RM1.60 resistance level ' the high of Jan 2011 and also thelow of Aug 2011 ' to affirm the upward bias. This will also see the 200-day MAVline broken, which is usually interpreted as a longer-term positive indication.Positions can be initiated if this happens with a stop loss on close belowRM1.40. An aggressive trader may even accumulate now in anticipation of asuccessful breakout.

Firm resistance is expected at RM1.70, the high of Oct 2011,and RM2.05 ' the gap of early August. Both levels are coincidently theFibonacci levels of the June-Oct 2011 decline. A close above RM2.05 willsignificantly increase its chances of reaching the price target of RM2.60,which is coincidentally the IPO price. The trade will not work out should thestop loss be triggered, after which we may see the stock returning to itscurrent sideways move. Strong support is expected at the September-low ofRM1.15, a violation of which will likely invite further selling.

Source: OSK188