Dialight should undergo some profit-taking after the rebound in recent sessions.

The stock is overvalued with a P/E ratio at 27,2x and an EV/Sales ratio at 3x for 2013. Further, analysts regularly revise downward their EPS estimates.

Graphically, the stock went through a period of rebound in recent sessions towards the GBp 1365 medium-term resistance. The share should consolidate near this area. It could act as a stopping point of the upward movement. This scenario suggests a return to the 20-day moving average, around GBp 1250.

The upside seems limited as shown by fundamentals and technical configuration. In contact with the GBp 1365 resistance, a movement of consolidation could return the stock towards GBp 1250. As a result, the most aggressive investors could take a short position near GBp 1365 but they need to set a stop loss above this resistance because the crossing of this level would invalidate our scenario