Negative indicator enhance our bearish view. Yesterday, the FSSTI ended at 3,473.08 pts, posting a 5.27-pt increase. However, for now, there is no change to our bearish view. Although we saw a momentum developing above the 3,417-pt level on 4 Jun, there is no strong upside follow-through to confirm that market sentiment has turned bullish. Instead, the index continues being pressed below the 100-day SMA line, which points towards a weak outlook. Overall, the bears are still in control over the bulls.

Based on the current technical landscape, we think that the current correction is still in a developing stage. This is supported by the 14-day RSI indicator being above the 30-pt oversold level at 44.23 pts, which suggests there is still room for further correction. In addition, the “Downside Gap” implies that the bearishness is likely to be extended further. These negative indicators enhance our downside view.

Our immediate support stays at 3,417 pts, obtained from the low of 1 Jun. The following support is seen at 3,377 pts, which was the low of 7 Dec 2017. Towards the upside, we set the immediate resistance at 3,478 pts, located at the high of 31 May. Should the FSSTI breach above this level, the next resistance is seen at the 3,513-pt threshold, derived from the low of 28 May.

Source: RHB Securities Research - 8 Jun 2018