Maintain long positions. The FKLI formed a black candle last Friday, and closed at 1,775.5 pts. The intraday tone was weak - as it generally trended lower throughout the session. It registered a high of 1,784 pts and a low of 1,774 pts, before closing at 1,775.5 pts, indicating a 10-pt decline. While the latest two negative sessions were increasingly indicative of the bears gaining control, we continue to see the risk to the upward move to likely emerge, only if the index drops past the immediate support of 1,766.5 pts. Until this happens, we maintain our near-term positive trading bias.

Provided the said immediate support is not breached, we continue to suggest that traders remain in long positions. To manage risks, a stop-loss can be set below the 1,766.50-pt mark, in line with our long recommendation of 1,812 pts – also the closing level of 27 Aug.

We still peg the immediate support at 1,766.5 pts, or 31 Jul’s low. The following support is at 1,740 pts, the low of 20 Jul. On the other hand, the immediate resistance is at 1,810.5 pts, the highs of 9 and 10 Aug. This is followed by 1,828 pts, the high of 29 Aug.

Source: RHB Securities Research - 8 Oct 2018