SNS NETWORK TECHNOLOGY BERHAD (Technical Buy)

• SNS Network Technology Berhad (SNS) closed at RM0.600 yesterday, posting a modest gain of 1.7%. The stock appears to be consolidating around the 50.0% Fibonacci retracement level of RM0.590 after experiencing a downtrend, with potential signs of recovery emerging.
• From a technical perspective, the stochastic oscillator has moved upward to 29.45 from oversold levels, suggesting the beginning of renewed buying interest. The Tom Demark Pressure Ratio (TDRP) is steady at 52.94, reflecting reduced selling pressure. Meanwhile, the RSI is showing signs of recovery at 39.19, indicating that the stock may be gearing up for a rebound. The stock also displayed a similar technical pattern on its weekly chart, reinforcing the possibility of a turnaround.
• Immediate resistance is located at RM0.620 (aligned with its 13-day SMA), followed by RM0.660, which coincides with the 50- day SMA. A breakout above these levels could propel the stock toward RM0.660 or RM0.680 (38.2% Fibonacci level). On the downside, the key support levels are at RM0.590 (50.0% Fibonacci retracement) followed by RM0.550, which serves as a critical floor.
• Investors looking for a recovery play might consider accumulating near RM0.600. A take-profit target of RM0.660 offers an upside potential of approximately 10.0%, while setting a stop-loss at RM0.545 limits downside risk to around 9.13%. This setup provides a fair risk-reward balance for short-term traders aiming to capitalize on SNS's potential rebound.

Source: Kenanga Research - 11 Oct 2024