Flonic’s daily chart (OSK)

Flonics’s share may trade higher after the firm close last Friday. After we highlighted the stock’s weakness in mid-Dec, the stock has declined sharply. It even broke below the RM0.17 support level, which reduces the possibility of upward continuation. It nonetheless found support at RM0.11, at the low of Aug and Oct 2011. After consolidating in a tight sideways range for 2 weeks, the strong “White” candle move last Friday likely signals the start of a rebound, with the high buying volume lending credence to the move. As such, look for it to trade higher and a position can be taken at the current level, or if possible, on pullback towards the stop loss at RM0.11. Given the low possibility of upward continuation, the price target is RM0.19, the low of mid-Nov, which represents a 38% regain on the Nov-Jan decline. This is provided that the stock can break above the RM0.17 resistance level, which was the high of Jul and Sep 2011. The trade will not pan out on a close below RM0.11, and the stock should continue its downward move instead.