Proton could be a trading BUY

Proton has a big move today. As at 3.30 pm, it is trading at RM2.35, off its high of RM2.40. Its Friday closing price was RM1.99 only.

From Chart 1 below, we can see that Proton has broken above its first resustance at RM2.05. The next resistance levels are RM2.65 & RM2.90.


Chart 1: Proton's daily chart as at 10/4/2009 (Source: Tradesignum.com)

From the long-term chart (Chart 2), we can see that Proton has broken above its medium-term downtrend line resistance at RM1.75 on the previous Friday (April 3rd). On the same day, Proton has broken above its 100-day SMA at RM1.78. The only significant news prior to the current price rally was the announcement of a strategic licensing and contract assembly agreement that allows Detroit Electric to utilize PROTON platforms for its production of Pure Electric Cars (PEV) on March 30th (here). Could this have spur such a strong upleg for Proton?


Chart 2: Proton's daily chart as at 10/4/2009 (Source: Tradesignum.com)

Financial Results & Position

Proton's financial results is poor as expected for the QE31/12/2008. See below.



Its financial position is fairly satisfactory, with current ratio at 1.9 times and gearing ratio at 0.05 times.

Conclusion

Based on the bullish breakout above the medium-term downtrend line, Proton could be a trading BUY. A good entry level is at RM2.00-10.