PASDEC (Trading Buy, TP@RM0.565). PASDEC has been experiencing persistent selling after reaching a high level of RM0.50 (R1) back in 11 May 2016. Yesterday, the share price managed to garner strong buying support from its RM0.42 (S1) level to surge 4.5 sen (10.71%), settling at RM0.465 on the back of strong trading volume, confirming the reversal play after the formation of an ‘Inverted Hammer’ candlestick. Strong uptick in RSI and Stochastic are also reinforcing the rebound play by reflecting the increasing buying momentum. With the bullish-bias technical picture, we are recommending a trading buy call on the stock with expectations that the share price will rebound towards its immediate resistance of RM0.50 (R1) and our target price objective of RM0.565 next in the near-term, which is 3 bids below its 21 April 2015 high level of RM0.58 (R2). Meanwhile, immediate support is seen at RM0.405 (S1) followed by RM0.35 (S2), where our protective stop-loss level is placed 4 bids below our S1 level at RM0.39.

DNEX (Not Rated). Yesterday, DNEX rose to a high of RM0.28 before ending the day at RM0.27, up by 2.0 sen (8.0%) for the day. The share price has been rallying for a second straight day, after announcing last week that the company had received an Umbrella contract to provide equipment and services for Petronas Carigali. Chart-wise, DNEX has broken out of a “Falling Wedge” pattern and this indicates that the share price is poised to reverse its earlier downtrend. At the same time, the MACD has been showing signs of positive divergence over the past six months – providing further evidence that the bullish trend reversal is sustainable. From here, we expect further gains ahead towards RM0.29 (R1) and possibly RM0.32 (R2) next. Immediate support levels are RM0.25 (S1) and RM0.22 (S2). 

Source: Kenanga Research - 24 May 2016