Technical Analysis of Midas Holdings Limited (Midas) - SGX

The price of Midas in the Singapore Stock Exchange (SGX) has performed very well in the past 2 months. It has increased more than 70 percent to the current price of $0.675 with a well-established up trend. It has been one of the most active stocks traded on SGX recently. Now that it creates strong market interest, is there a chance of this share price going higher?

Midas Holdings Ltd. (Midas) engages in the manufacture and sales of aluminium alloy products and polyethylene pipes for the infrastructure sector including rail transportation in China. Midas Holdings Limited was incorporated in 2000 and is based in Singapore and was listed on the SGX on the 23rd of February 2004.

Recently in May, analysts from a few broker firms raises target price for MIDAS. DBS Vickers raised the target price from $0.60 to $0.82. Kim Eng also raised its target to $0.82 from $0.62. However, both CIMB and OCBC cut recommendation from buy to hold with a target of $0.70 and $0.64 respectively. In April, Credit Suisse raises target price to $0.75. Based on these analyses, there is a strong fundamental factor for this counter.

Price of Midas is currently in an uptrend as the short to long term 30- to 90- day moving average is increasing at a steady pace. It is currently well above the moving averages. The trading range of the uptrend in the price of Midas can be established using the linear regression trend line as displayed in the chart below. The current price is just below the top line of the regression channel, which normally acts as a resistance level.


The uptrend is supported by a steady bullish momentum. The Relative Strength Index (RSI), Momentum and MACD indicators are in convergence with the price peaks and troughs. This means that there is a high chance of price creating new highs. Compared to the general performance of the market, the stock price for Midas is still a laggard. The STI has currently retraced to about 38% from the major bear trend since October 2007, while the price of Midas has only retraced to 28%. The 38% retracement for Midas is $0.92. Therefore there is a room for price to go higher.

There is a strong resistance at $0.715 and if the price is able to break above this level, then the probability of price going higher to $0.92 would be high but if it is unable to break above the resistance it may correct downwards as the price is currently at the top level of the uptrend channel. Support level is $0.60 and if price goes below this level, it may start to go even lower to the lower line of the uptrend channel at $0.45.


Daily Midas chart as at 5 June 2009 using NextVIEW Advisor Professional

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.