Naked Chart Trading: NOTION 27 May 2024

Thanks to the recent AI development in Malaysia and worldwide, where data centres may boost demand for HDD, is this theme the main catalyst for recent Malaysia HDD related stocks rally?

Few weeks ago, Electronics manufacturing services (EMS) firm NOTION reported a net profit of RM14.04 million in the second quarter ended March 31, 2024 (2QFY2024), a turnaround from the net loss of RM7.77 million a year ago, driven by strong demand for the group's EMS products.

Revenue climbed 32% year-on-year to RM111.6 million for 2QFY2024 from RM84.69 million, primarily driven by higher orders in the hard disc drive (HDD) and EMS segments. HDD segment revenue increased by 13% to RM29.56 million from RM26 million a year ago, supported by global inventory shortages and a recovery in Notion Thailand's HDD machining business.

Price wise, NOTION's share prices hit more than 3 years high with a strong breakout since Feb 2024, which can be the surge before release of quarter earnings.

During pandemic times, the share prices hit its highest on Aug 2020, followed by a major downtrend and entered a long sideway trading from year 2022 to early 2024. A strong breakout occured in Feb 2024 and strong rally since few weeks ago, with its share prices gained more than double in May 2024 alone.

The question being, can this bullish momentum sustain?

From Fibo analysis (Aug 2020 high to Jun 2022 low), the share prices currently testing 50% Fibo level around RM1.30, close above RM1.40 to trigger more upside. Next resistance levels are 61.8% around RM1.60, RM2 and RM2.40 level around Aug 2020 high.

Zoom into shorter time frame, immediate support level at RM1.10, RM0.960, RM0.860 and RM0.760. There is no bearish reversal pattern for now, but be cautious as the price now testing 50% Fibo level.

Disclaimer
This content is for reference only and does not constitute any investment advice, and past performance is not indicative of future performance. Returns will vary, and all investments carry risks, including loss of principal. Please make your own investment decisions.