Tighten up risk management; maintain long positions. Last Friday, the FKLI closed positively despite softness in the early part of the session. At one point, it dropped to a low of 1,796 pts, before a rebound kicked in – which sent the index to a high of 1,810.5 pts – matching the prior session’s high. It closed 2.5 pts higher at 1,801.5 pts. The ability of the index to bounce back and close above 1,800 pts – ie maintaining its position above the 200-day SMA line – are indications that the bulls are still in charge. Hence, we maintain our near-term positive trading bias.

As the bulls continued to make their presence felt and the FKLI remained above the 200-day SMA line, traders should stay in long positions, initiated at 29 Jun’s close of 1,688.5 pts. To manage risks, we revise the trailing-stop to the latest session’s low of 1,796 pts.

We keep the immediate support at 1,766.5 pts, the low of 31 Jul. The following support is at 1,740 pts, the low of 20 Jul. On the other hand, the immediate resistance is now set at 1,844.5 pts, the high of 23 May. This is followed by 1,876.5 pts, the high of 15 May.

Source: RHB Securities Research - 13 Aug 2018