This week, Frencken has caught my attention with its 34% surge from $0.690 on 31 Oct 2019. It closed $0.925 on 19 Nov 2019. At $0.925, this is very near to its 10-year high closing price $0.930 set on 18 Nov 2019. Since 31 Oct 2019, it has risen 10 out of the past 13 trading days with two days having closed unchanged. RSI closed at 88.1 on 19 Nov 2019, which is near a 14 year overbought level.

Based on Frencken’s chart, it seems to present a favourable risk to reward short trade. Please see the basis and more importantly, the risks.

Basis

A) Analytical, automotive and industrial automation segment to slow in 4QFY19, on y/y basis

According to Frencken’s 3QFY19 results, its analytical and automotive segments are likely to see a year on year decline in topline for 4QFY19 results. More importantly, Frencken’s industrial automation segment (largest