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Wednesday, 29 November 2006

FRASER SECURITIES (S) : StatsChipac --technical

StatsChipPac ($1.24) – broadest monthly breakout since Jan 2004 on heavy volumes paves way to reach next price objective of around $1.35-40

The stock has staged significant price breakouts since mid-Nov, which should mark the start of a decisive recovery phase with the first objective at this year’s April-May highs of $1.35-42.

Given the 41% mid-year plunge to 84 cents and the lengthy consolidation around 90 cents to $1.05 since then, this month’s breakout seems overdue and is on solid technical grounds.

Although short term indicators as RSI, momentum and MACD are overbought these are neutralised by similar medium term measures which point to further recovery in the weeks and months ahead.

The swift recovery today to a new 6-month high of $1.26 after yesterday’s pullback to $1.18 from the previous day’s $1.25 high further proves the strong momentum of the current rebound. The 50 and 100 days moving averages have just made a golden cross.

In fact Nov’s volumes are the highest since Jan when the counter started its ascent from the then year’s low of $1.01 to $1.42 in April.

This month, starting off at 97 cents, Stats has already created the widest monthly gain of 29 cents to reach $1.26 today, which has never been recorded since the 32 cent gain in Jan 2004 when it was at much higher levels between $2.12 and $2.45.

Nevertheless the stock has always fallen short the 38.2% mark recovery ($1.45 and $1.48) between this 3 year-high of $2.45 and 2005-06 lows of 88-84 cents, managing modest highs of $1.34 last year and $1.42 in 2006.

Now given the strong recovery momentum which is unlikely to die down in the next several weeks, Stats appears poised to test these highs and once the $1.36-44 area which contains key quarterly resistances since 2001 is taken out, the next level will be $1.61-64. Support is at $1.12-16.

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