Overbought blue chips and regional weakness following a weaker April PMI data from China forced the local market into extended correction on Tuesday. The KLCI slid 6.29 points to close near session lows at 1,700.39, off an opening high of 1,707.85, as losers beat gainers 470 to 202 on lack-luster trade of 742.4mn shares worth RM1.4bn.
Breakdown Below 1,699 to Test 1,688
Weakening technical momentum and lack of buying support implies further room for stock price correction from current levels. A confirmed breakdown below 1,699, the previous record high of Jan 2013, would accelerate a correction towards last Tuesday’s low of 1,688. Stronger retracement supports are at 1,658, representing the 23.6% Fibonacci Retracement (FR) level, and 1,633, the 38.2%FR. Immediate resistance stays at the intra-day record high of 1,716, with next significant hurdle at 1,740, 123.6% Fibonacci Projection (FP) target.
SELL RHB Capital & IJM Land
RHB Capital is likely to extend correction on bearish momentum towards the 50-day moving average (RM8.25), with a breakdown to re-visit the prior 17/1/13 peak of RM8.00, before stabilizing. Key hurdle will be the recent 3/4/13 high of RM8.74, mirroring the peak of a rounding top chart pattern. Similarly, IJM Land may correct further towards RM2.45 (76.4%FR), while a breakdown would target RM2.28 (61.8%FR) before buyers return. Key resistance would be the 19/7/12 peak of RM2.72.
by TA Securities Research
