Stocks to Watch: Padini [7052], Sendai [5205]

As requested by some of the readers, we shall discuss on Padini and Sendai today. Let’s begin our analysis with Padini [7052].

padini (1)
Ever since the uptrend was projected in late February, share price of Padini has been moving up gradually. Just recently, it hit a short-term high of RM2.10 on the 9th of April before falling for 4 consecutive days, partly due to poor market sentiment. The share price was dragged below its upward channel to its horizontal support of RM1.86 yesterday and after trading at a tight range, price managed to close higher at RM1.88 today. The signal for potential reversal and limited downside risk at the current price level means that long-term investors/ traders should start accumulating this share now. While the upward channel is no longer valid, the uptrend remains intact as long as the crucial RM1.86/RM1.85 support is not breached.

Since its share price had recently creating a higher high and we are using the horizontal support of RM1.86 as the base, we are essentially looking at an ascending broadening wedge. Price is expected to swing to levels above RM2.10 if we were to predict the target price using this chart pattern. Alternatively price may retest its previous high and decline thereafter, forming a double top. This would be less optimistic compared to the previous price prediction. A head-and-shoulder is possible too at this juncture since the share price had, over the past 3 months, moved up in 3 waves (counted from the low of January), causing the recent downtrend to be a possible “wave a” of the Elliot Wave Theory and the upside of the technical rebound that follows to be limited. Since we do not know exactly where will the price reverse, we have to stay alert and watch for bearish reversal signals after the rebound of the share price which is expected to happen anytime this week. Next, we discuss briefly on Sendai [5205].

After falling sharply for 5 consecutive days with relatively low volume to RM1.17, the Fibonacci 78.6% level, Sendai’s share price had finally stopped creating new low today.  The current level is appropriate for aggressive traders to buy into this share since a long upper-tail doji is formed with high volume, signalling a possible trend change. If price manages to close higher tomorrow, the possibility of it revisiting its higher resistance of RM1.25/RM1.28/RM1.33 would be greater. If price breaks below the RM1.17 support  instead, we would need to look at the RM1.15 and RM1.09 level closely for reversal signals.

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