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SIA engineering, will it turn to a mid-long term uptrend?

STI has gone up 70 points since Jan. In the past 1-2 weeks, STI is attempting to break above the resistance between 3430-3450. As 3450 is a 2 year high for STI, it may be difficult for it to break above this resistance smoothly. A consolidation or even pull back for STI may happen. Under this market condition, it will be relatively risky to look out for stocks that already move a lot recently. Those stocks that had not move much may give a better risk/reward ratio at this point of time. SIA engineering is one of this type of stocks that investors may look into. From weekly chart, it can be seen that after a downtrend for 2 years, it has dropped from $5.32 to $3.91, dropped almost 27%. In addition, after this long term downtrend, the stock start to show some signal of strength on weekly chart: MACD histogram goes above 0 and Moving averages (personally I use 7 and 13 EMA) also start to turn up. It seems that $3.90- $4.00 is a strong support for this stock. The financial statement released on 3 Feb reported that profit dropped 29%, which is considered bad, however, the sell down after the release of the report was mild, indicates that sellers are not strong. Heng for 5 Feb, it can be seen that regardless the high trading volume, the price managed to close at the high end of the candle, indicates that buyers may start to step in. Therefore, it may be an opportunity for investors to buy on dips and expect the stock can continue the rebound and even turn to a mid to long term uptrend thereafter. In terms of operation, may consider take some position at around $4.1-$4.15 and add more position if price drop to around $3.95-$4.00.

Weekly chart:

Daily chart:

Robin Han
Robin Han

Dr. Robin Han, a graduated from NUS with a Ph.D in Department of Chemical and Biomolecular Engineering, has been actively trading in Singapore stock market since 2007. His passion has let Dr. Robin to become a full time trader since 2010. He has extensively share his experience with his fellow investors on trading Singapore stock market using both technical analysis and fundamental analysis.

Dr. Robin is a regular guest speaker for radio 95.8 on financial program. He also has been invited by different companies and societies to conduct educational seminars on stock investments, including Shares Investment, Wealth Directions (Founder: Dennis Ng), Traders Round Table, SIM, Raffles Business International, Online trader's club and Alpha Alliance. He is also contracted by N2N (a listed trading software provider in Malaysia) as their overseas educational speaker in stocks.