Stock Of The Week: DIGISTAR

DIGISTAR Corp Bhd retraced from an all-time peak of 57 sen on Feb 20 last year to a low of 19.5 sen on May 3 this year on correction, pressured by apparent profit-taking activity after a good rally.

Soon after finding shelter, the stock recovered to a high of 32 sen in late May on renewed bargain hunting interest, followed by a mild pullback to the 26 sen on June 25 before bouncing back to the 31 sen level on Tuesday and subsequently turned range-bound on consolidation.

Based on the daily chart, Digistar is currently flirting outside the 14-month-old bearish descending line, as well as keeping the posture above all the moving averages on our radar screen. These developments suggest that the recent correction has ended.

Meanwhile, trading volumes are seen piling up. If the young bulls are really building up the momentum for recovery, investors can expect prices to resume recovery soon.

A breach of the 32 sen barrier is likely to propel the shares to the greater resistance of 45 sen-48 sen band. The next target would be to challenge the historic high of 57 sen, of which a major breakout would open the gate or the bulls to explore unknown territory.

For now, the daily slow-stochastic momentum index had issued a tentative short-term buy at the 76% level on Thursday while the 14-day relative strength index maintained the position at the bullish territory.

In addition, the daily moving average convergence/divergence histogram continued to expand upward, in tandem with the daily trigger line. It had issued a buy call on Monday.

Technically, indicators are pretty encouraging, implying a steadier trend ahead.

Current support is resting at the 28 sen floor and important support is pegged at the 100-day simple moving average of 26 sen. — By KM LEE, thestar.com.my

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