Maintain short positions, as we expect the immediate support to be retested. Last Friday, the FKLI continued to struggle below the 50-day SMA, and shed 7.5 pts to close at 1,674 pts. In the session, it also oscillated between 1,668.5 pts and 1,679 pts. Overall, the bias for the index to retest the immediate support of 1,631.5 pts should remain firm, as long as it is capped by the said SMA line. Towards the upside, the negative may only be negated if the index breaches the immediate resistance of 1,703 pts. As such, we keep to our negative trading bias.

As the bears are in firm control, we continue to recommend that traders maintain short positions. We initiated these at 1,664.5 pts, the closing level of 2 Jan. To manage risks, a stop-loss can be placed above 1,703 pts.

Immediate support is expected at 1,631.5 pts, the low of 18 Dec. This is followed by the 1,600-pt mark. Meanwhile, the overhead resistance is at 1,703 pts, the high of 31 Dec 2018. This is followed by 1,729 pts, the high of 8 Nov.

Source: RHB Securities Research - 7 Jan 2019