No positive follow-through from the 50-day SMA line; maintain short positions. The FKLI eased 6.5 pts to close at 1,651.5 pts in the latest session. The low and high were posted at 1,646 pts and 1,655.5 pts. The negative session means that there was no positive follow-through from the prior session’s positive performance, which took place near the 50-day SMA line. Overall, the negative bias that started from the failure to breach above the 1,700-pt immediate resistance on 2 Jul, is still not showing signs of reversing. Hence, we keep to our negative trading bias.

In the absence of a price reversal signal from the support zone that is made up of the said SMA, and immediate support of 1,633.5 pts, we continue to recommend that traders remain in short positions. We initiated these at 1,668, the closing level of 12 Jul. To manage risks, a stop-loss can be placed above the 1,700-pt mark.

We maintain the immediate support target at 1,633.5 pts, the low of 17 Jun. This is followed by 1,613 pts, the high of 13 May. On the other hand, the immediate resistance is set at 1,700 pts. Breaking this may see the index slide towards 1,730 pts, near the high of 21 Feb.

Source: RHB Securities Research - 23 Jul 2019