Stock Of The Week : DIALOG

DIALOG Group Bhd retraced from the recent peak of RM2.52 on Jan 6 to a low of RM2.16 in late March on correction owing to an apparent profit-taking activity. Thereafter, the shares rebounded slightly to trade range-bound on bargain hunting nibbling alternated with light selling, undergoing consolidation.

Based on the daily bar chart, this stock has found the bottom and it is now in the midst of building a concrete platform to launch the next leg of uptrend.

Elsewhere, the daily slow-stochastic momentum index was ticking up. Its oscillator per cent K climbed over the oscillator per cent D to trigger a short-term buy at the neutral zones yesterday.

Mirroring the trend, the 14-day relative strength index improved significantly to settle at the 60 points level after being locked between the neutral and mid-range the past several days.

In addition, the daily moving average convergence/divergence histogram resumed the positive expansion against the daily signal line to retain the bullish note. It had issued a buy call on April 4.

Technically, Dialog shares appear at the tail-end of base building. Going forward, the next logical trend would be an upward momentum.

Initial resistance is envisaged at the RM2.30 mark, followed by the RM2.34 level, also the 100-day simple moving average line, of which a successful penetration would signal the start of a new bullish wave, targeting a re-test of the recent high of RM2.52.

In the case the RM2.16 solid floor is violated, the lower support line, resting at the RM2 mark, will become much weaker. - By K.M.Lee

● The comments above do not represent a recommendation to buy or sell.