SNS NETWORK TECHNOLOGY BERHAD (Technical Buy)

• SNS Network Technology Berhad (SNS) closed at RM0.575 yesterday, rising by 0.88%, as the stock continued to build on its rebound from recent lows. Notably, the stock has surpassed our previous TP of RM0.565, delivering a +7% return on our last recommendation on 3 December. The ongoing sideways consolidation observed since 3 December signals strengthening momentum, with the potential for another decisive move on the horizon. The 5-day SMA crossing above the 13-day SMA reinforces the bullish undertone, supported by growing buying interest.
• From a technical standpoint, the stochastic oscillator at 68.42 is trending higher, indicating strong upward momentum as the stock approaches overbought levels. The Tom Demark Pressure Ratio (TDPR) at 65.49 reflects consistent buying pressure, supporting a favourable environment for continued gains. Meanwhile, the RSI at 59.17 is trending upward, sitting above the neutral 50-mark and reinforcing a positive outlook. The bullish divergence observed in the RSI further validates the stock's recovery potential.
• Immediate resistance is located at RM0.585, with a breakout above this level likely to propel the stock toward RM0.620 and RM0.680, representing significant resistance zones. On the downside, immediate support is seen at RM0.550, with additional buffers at RM0.505 and RM0.475, offering stability against potential pullbacks.
• For traders seeking to leverage SNS's bullish trajectory, accumulating the stock between RM0.565-RM0.575 presents an attractive entry point. Setting a take-profit target at RM0.620 offers an upside potential of approximately 7.8%, while a stop-loss at RM0.535 limits downside risk to around 6.9%. This setup delivers a balanced risk-reward profile, appealing to traders anticipating further gains in SNS's price trajectory.

Source: Kenanga Research - 9 Dec 2024