Bursa Malaysia: Extended Correction on Weak Momentum

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

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