Pos’ daily chart (OSK)

Pos’ share price may trade higher after making a short-term bottom yesterday. The stock has been in correction mode for the past 2 months. Nonetheless, the correction carries a hint of upward bias to it. This comes after higher highs in Jan and Oct last year, and higher lows in Dec and Sept. The recent low of RM2.63, which has corrected 62% of the Dec-Jan rally, is supportive of a continuation of the uptrend. The failure of the “Long Black” candle of 2 March suggests that selling pressure has dissipated. Note too that the recent low bounced off the 100-day MAV line, which is now rising, and the high volume of the past 2 days signals possible accumulation at higher lows. The highest close in 9 days yesterday should confirm the formation of a bottom and the stock may trade higher. Positions can be initiated above RM2.70 with a close below RM2.63 as stop loss. A measured move based on the Dec-Jan rally could see the price head towards RM3.20 and a strong move may see the test of the June 2011 high of RM3.40. The trade will not work out if the stock closes below RM2.63 and subsequently, expect the correction to resume instead. Strong support lies at the December-low of RM2.45.