Caution as Yinda spikes; blue chips recover

Leaving the narrow range of the Straits Times Index aside, Catalist-listed Yinda Infocomm experienced a sudden surge that elicited a query from regulators. In two trading sessions, prices rose from 20 cents to a high of 39.5 cents. The stock was trading at 35.5 cents on May 27. Technically, such surges are rarely part of sustained moves, especially by small caps — unless one considers the likes of the three penny stocks which crashed in 2013 and the related ISR Capital which has been renamed.

Although quarterly momentum has been a lot higher in a previous rally, short-term indicators are at the top end of their ranges. Stochastics, 21-day RSI and ADX are at their all-time highs, indicating an extreme overbought situation. The only advice is to trade with caution.