Sanichi may trade higher after the firm move yesterday. Thestock was in correction mode after reaching its peak in Dec 2011. In fact, thecorrection was rather severe as it has retraced more than 62% of the Oct-Decrally. But the quick rebound back above the broken support level  of RM0.12 two weeks ago  has suggested a false breakdown and a returnof buying support.  Buying should be confirmed  by the highest close in more than a  month yesterday, especially with the heavybuying volume. Thus, a new up-leg to the rally can be reasonably expected.Purchases can be made above the one-month high of RM0.135 with a close belowRM0.12 as the stop loss.  The pricetarget is the prior highs of RM0.20 and RM0.25, provided that the February-highof RM0.165 is convincingly broken. The upside bias is neutralized if the stoploss is triggered and weakness is confirmed on a close below  the recent low of  the psychologicalRM0.10. This should signal the end of the rally that started in Oct last year.

Naim Indah needs to break above the short-term resistancelevel to keep uptrend intact. The stock was highlighted early in the month asit was likely to climb higher. Our interest was trigerred by the extension ofthe series of higher lows, with the latest one at the early April-low ofRM0.43. The stock rallied for  two daysbut soon went  into a tightconsolidation.  It has been tradingbetween RM0.515 and RM0.575 for the past 7 days.  In fact, the sideways move carries a slightnegative bias from the 'Upper Shadow' that accompanies the candles. Nonetheless,a prudent trade should wait until a breakout before taking action. Given theuptrend, an upward continuation is still expected and this will be confirmed bya close above RM0.575.  Positions can beinitiated if  this happens with a stoploss on close below RM0.515.  Resistanceremains at RM0.70 and a  successfulviolation of  this level  could see the stock testing the psychologicalRM1.00 mark. But look  for the stock totrade lower should it close below RM0.515, while a close below RM0.41 shouldconfirm the weakness and may even spell the end of the 3-month uptrend.

Source: OSK188