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Eye On Stock - Dancomech

Dancomech Holdings Bhd (code: 5276) is looking bullish after it moved ahead of the 50-day simple moving average (SMA) on Friday.

While the stock made similar breaches earlier this month, there is more attention to the stock this time around as evidenced by the growing trading volume, indicating improved investor interest. In fact, the trading volume is showing signs of returning to the levels last seen in November last year, where the counter experienced a sharp rally amid a spurt in investor activity.

At Friday’s intra-day high, the stock briefly crossed the resistance of 69 sen, its highest closing price in January. A convincing breach of this resistance would free the share from the ongoing consolidation and return it to a short-term uptrend.

The dominant trend on the daily price chart remains bullish, going by the ascending moving averages. The 14- and 21-day SMAs have had been brought lower by the recent sideways price action, although they could seen return to a more bullish position above the 50-day SMA. Barring another day of gains, the stock remains at risk of falling to its support, which is pegged to the 60-62 sen range.

The 100-day SMA which is hovering within this range offers reliable support, having remains mostly intact since July 2020. A fall below this level would be a bearish turn and indicate the start of a correction phase. Looking at the technical indicators, things are turning more optimistic.

The slow-stochastic momentum index was risen to 49 points, enroute to a crossing of the 50-point midline that will suggest strong momentum. The 14-day relative strength index has risen to 70 points and remains healthy with room to grow before crossing into overbought levels.

Meanwhile, the daily moving average convergence/divergence line has turned positive after crossing above the signal line and zero line, to suggest bullish growth. The comments above do not represent a recommendation to buy or sell.


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