Stay short, as bears are back in action. The FKLI weakened 16.5 pts to close at 1,616.5 pts yesterday. The intraday tone was negative as it generally trended lower throughout the session. The high and low were at 1,628.5 pts and 1,615.5 pts. Based on the index’s price actions in recent sessions, its minor rebound phase which started from 18 Apr’s “Hammer” may have ended. As such, chances are high that the index may extend its downward move which started from the failed attempt to cross above the 1,729-pt level. Based on this, we keep to our negative trading bias.

As the negative trend is still not showing signs of reaching an end, we continue to recommend that traders stay in short positions. These were initiated at 1,698 pts, the closing level of 1 Mar. To manage risks, a stop-loss can be placed above 1,646 pts. Towards the downside, we expecting immediate support at 1,600 pts, followed by 1,550 pts.

Towards the upside, we are eyeing the immediate resistance at 1,656.5 pts, the high of 26 Mar. This is followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 10 May 2019