E&O (Not Rated). Yesterday, E&O rose 8.0 sen (4.57%) to close at RM1.83 on the back of strong trading volume. The share price has completed a ‘Rounding Bottom’ chart pattern with a bullish MACD convergence. Nonetheless, RSI and Stochastic have ventured into their respective overbought zone, suggesting the possibility of a short-term pullback in the near horizon. From here, interested investors are advised to wait for a decisive breach above the RM1.83 (R1) level before entering the stock, where a swift take out of the aforesaid level could set course for the share price towards RM2.00 (R2) in the near-term. Meanwhile, failure to break above the immediate resistance level of RM1.83 (R1) could see the stock consolidate towards RM1.77 (S1) with next support seen at RM1.69 (S2).

AMEDIA (Not rated). AMEDIA rose 2.0 sen (15.38%) to stage a breakout from its two-day consolidation, closing higher at RM0.15 on strong trading volume. The primary trend is positive as the underlying price is trading above all up-trending key SMAs. The MACD is also persistent on its bullish convergence, with upticks seen in RSI and Stochastic albeit in overbought conditions currently. If AMEDIA manages to take out its immediate resistance level of RM0.155 (R1) decisively in the next few days, further upside could be seen at RM0.175 (R2) next. In this case, we prefer to stick with a more conservative approach by advocating investors to take advantage of any consolidation towards the RM0.14 (S1)/ RM0.125 (S2) support as an entry point.

Source: Kenanga Research - 21 Jul 2016