Suncity has just surpassed the strong resistance of RM3.10-14

Suncity has just broken above the strong horizontal resistance of RM3.10-14. As at 4.00 pm today, the stock was trading at RM3.16, on volume of 9500 board lots. It has yet to break above its medium-term downtrend line. The resistance from this downtrend line is at RM3.60.


Chart 1: Suncity's daily chart as at May 15, 2008 (source: Quickcharts)

What's more interesting is that Suncity-WA has broken above its downtrend line at RM0.50. The warrant has been trading in a range of RM0.38 to RM0.50 for the past 2 months. As at 4.00 pm, it was trading at RM0.52, on volume of 14000 board lots.

Suncity-WA is a new warrant, with a maturity period of 10 years (expiring in October 2017). Its exercise ratio is 1:1 & the exercise price is at RM4.87. Thus, this warrant has a very high conversion premium of 70%, based on present prices of mother share & warrant. Its strong points are its long maturity period & the high gearing (currently, at 6.1 times).


Chart 2: Suncity-WA's daily chart as at May 15, 2008 (source: Quickcharts)

Suncity has just broken above its strong horizontal resistance of RM3.10-14. While the medium-term outlook is still negative (since the downtrend line is intact), its short-term outlook may have turned positive. This would boost the price of its warrant. As noted, the warrant has broken above its downtrend line as well as its trading range. Suncity & its warrant could be a good investment for the medium-term.