Attractive Trading Stock On Price Breakout

Most market participants are aware that a stock that breaks out from its resistance or support level, especially on high volume following a long period of consolidation, presents a very attractive trading opportunity. However, finding such a good stock for trading can often be a tedious process. At present, one stock that may well turn out to be an attractive trading stock on price breakout is Dukang.
This stock has been consolidating within a 5-cent-range from 30.5 to 35.5 cents for the past 4 months. Its resistance level at 34.5/35.5 has already been tested on no less than 6 occasions.
Dukang reported very impressive results for 1H13 with nett profit (RMB 207M) almost matching its full year’s profit of RMB 218M for FY12. However, its share price has remained depressed for some time for various reasons, one of which could be the recent downward pressure on price and consumption of premium baijiu brands in China, such as Moutai and Wulianye; the perception may be that this would also have an adverse impact on Dukang’s products and profitability. With 1H13 EPS at 26 cts(RMB) or 5.1 cts(S), Dukang may be ready to see a re-rating of its share price if it can deliver a set of 3Q13 result that is above most people’s expectation. This may just be the catalyst needed for its price to a break above its resistance level provided market sentiments do not turn bearish.
DOWNSIDE: A poor set of 3Q13 result may see the stock testing its support at 30.5/31.5 cts level; 52-week Low (& support level) – 20.5 cts

Congratulations to all who were able to buy Dukang on breakout this afternoon. Unfortunately I had another appointment and was not around to execute this breakout trade – money just isn’t for me this time.

It did break out from 34 cents to 40+ but has now settled down at 37.5 cents. Do you think it is consolidating for another breakout?

Reck – A stock can spend quite some time consolidating before breaking out from its resistance level. I think Dukang is unlikely to repeat the attractive chart pattern like the recent one for some time. However, this in no way implies that Dukang is unlikely to make another price breakout in the near term. It is just that the odds for achieving a successful trade then are likely to be much less, unless one is an expert trader.