The stock's RM0.14 gain on 7 Dec 2012 was the result of its share price breaking out from Can-One's nearly six-month-old downtrend  line.  Since  then,  the  stock  has  been  in  a  consolidation  mode,  fluctuating  between  the  RM2.31  and  RM2.50 levels.  The  stock  did  indeed  make  two  attempts  to  crack  above  the  RM2.50  level  during  its  consolidation  phase,  but  had failed on both occasions.

Anyhow,  since  the  nearly  six-month-old  downtrend  has  been  violated,  we  view  the  current  consolidation  as  a  good opportunity to accumulate Can-One shares, as the stock is likely to eventually close above RM2.50 and extend the rebound that started on 7 Dec 2012.

We  are  eyeing  the  RM2.64  level  as  the  immediate  upside  target,  followed  by  RM2.91,  both  representing  the  stock's resistance  levels  should  the  RM2.50  level  be  taken  out.  Nevertheless,  traders  may  want  to  cut  losses  should  the  RM2.31 base level be violated, since its violation would mean that the stock will enter a lengthier consolidation phase.

Below the RM2.31 level, look for immediate support at the RM2.24-RM2.26 area, followed by the RM2.12 level.

Source: OSK