Maintain short positions. Yesterday, the FKLI failed to maintain the positive tone of earlier sessions, and slipped by 2.5 pts to settle at 1,673 pts. The session’s high and low were at 1,689 pts and 1,671 pts. The failure of the index to sustain its positive momentum and the fact that it continued to struggle below the 50-day SMA line indicate the lack of bullish influence over the trend. As long as the index is still capped by the SMA line, chances are still high that the immediate support of 1,631.5 pts can be retested. As such, we keep to our negative trading bias.

As the evidence still points to the risk of a further retracement, 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.

The immediate support is maintained at 1,631.5 pts, the low of 18 Dec. This is to be followed by the 1,600-pt mark. On the other hand, immediate resistance is estimated 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 - 10 Jan 2019