KUALA LUMPUR: HLG Research said on the back of sluggish Wall Street and Europe markets, coupled with the expanding profit taking momentum on the local core blue chips on Thursday, Sept 23, it expects to see more downside volatility ahead.

"As the 1st support of 10-day SMA was broken yesterday due to fierce selldown, this could send the index to the steeper support levels of 1,442 (20-day SMA), 1,420 (30-day SMA) and 1,407 (40-day SMA)," it said.

HLG Research cautioned that if these support levels failed, it may even test the immediate uptrend line support around 1,385-90.

"Thus, until signs of a rebound emerge, investors should treat this market with caution," it said.

As for the Dow Jones Industrial Average, it said there could be more profit taking consolidation ahead as it has formed a Bearish Engulfing Line as well as trend and momentum indicators are losing steam.

Immediate resistance levels are 10,900-11,000 whilst support level falls around 10,462 (200-day SMA), followed by 10,338 (100-day SMA).