Maintain short positions, as the bulls are still struggling to take control. The FKLI erased most of its intraday gain towards the end of the latest session. The index slid from a high of 1,613 pts to settle at 1,601.5 pts, indicating a mere gain of 1 pt. The inability of the index to hold on to its intraday gain suggests that the bulls still lack strength. For now, as long as the index is still capped by the downtrend line (as drawn in the chart) and 1,646-pt level (the trailing-stop for our ongoing short positions), the overall negative bias that started from the failed attempt to cross the 1,729-pt level should still be in place. We maintain our negative trading bias.

In the absence of price signals pointing to a stronger rebound, we recommend that traders stay in short positions. These were initiated at 1,698 pts, the closing level of 1 Mar. To manage the risks, a stop-loss can be placed above the 1,646-pt threshold.

We still expect the immediate support to emerge at 1,550 pts. The second support may appear at the 1,500-pt psychological level. Moving up, the immediate resistance is pegged at 1,656.5 pts, ie the high of 26 Mar. This is followed by 1,694.5 pts, the high of 19 Mar.

Source: RHB Securities Research - 23 May 2019