No positive follow-up; maintain short positions. The FKLI ended the latest session lower by 9 pts to close at 1,600.5 pts. The session’s low and high were recorded at 1,596 pts and 1,607.5 pts. The weak session means there was no positive follow-up from the prior session’s positive performance – this suggests the index is still unable to confirm an interim low. Overall, the negative bias that started from the failed attempt to cross above the 1,700-pt resistance mark in still firmly in place. Hence, we maintain our negative trading bias.

Given that the weak price trend is still not showing signs of reaching an end, we continue to recommend that traders remain in short positions. We initiated these at 1,668 pts, the closing level of 12 Jul. To manage risks, a stop-loss can be placed above the 1,660.5-pt mark.

Towards the downside, we are expecting the immediate support at 1,573 pts, the low of 14 May. Breaking this may see the market test the 1,550-pt mark. On the other hand, the immediate resistance is set at 1,660.5 pts, the high of 24 Jul, followed by 1,700 pts, a round figure.

Source: RHB Securities Research - 8 Aug 2019