Maintain short positions, as there is no firm sign of a reversal. The FKLI settled 7 pts to close at 1,593 pts last Friday, after trading ranged between 1,583.5 pts and 1,596 pts. Still, the positive session has not produced signals that could suggest the weak trend that started from early July has ended. We believe the index is, instead, just developing a minor rebound. Once this is over, the immediate support of 1,573 pts will likely be challenged. For now, this weak bias would stay in place as long as the index is still capped by the immediate resistance of 1,621.5 pts. We maintain our negative trading bias.

Given that the bulls are still shying away, traders should remain in short positions. We initiated these at 1,668 pts, the closing level of 12 Jul. To manage risks, a stop-loss can now be placed above the 1,621.5-pt mark.

We are keeping the immediate support target at 1,573 pts, ie the low of 14 May. This is followed by the 1,550-pt mark. On the other hand, immediate resistance set at ,621.5 pts, the high of 9 Aug. This is followed by 1,660.5 pts, the high of 24 Jul.

Source: RHB Securities Research - 19 Aug 2019