Maintain short positions as the rebound is relatively minor. The FKLI formed a while candle in the latest session to settle 14.5 pts higher at 1,615 pts. The intraday tone was positive as the index generally trended up for the whole session, with the low and high posted at 1,601.5 pts and 1,617.5 pts. We see the latest positive performance as just a minor rebound within the index’s weak price trend. This follows the index coming in near to test the immediate support of 1,573 pts on the back of the oversold Daily RSI reading in the previous session. Hence, we maintain our negative trading bias.

Until there is strong evidence to suggest that a deeper rebound is in the process of developing, 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.

We are keeping the immediate support target at 1,573 pts, the low of 14 May. The following support is eyed at 1,550-pt mark. Meanwhile, 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 - 9 Aug 2019