Trend remains negative; maintain short positions. The latest session saw the FKLI briefly tag the 1,600-pt round figure – the intraday high was posted at 1,600.5 pts. However, it failed to hold on to this positive tone. At the closing, it eased slightly by 1 pt to close at 1,592 pts. We continue to see the index trading weakly, which started from the failed attempt to cross above the 1,700-pt mark on 2 Jul. The recent rebound is just a minor pause, near the immediate support of 1,573 pts. Towards the upside, the prospect for a stronger rebound may only develop if the index succeeds in crossing the immediate resistance of 1,621.5 pts. Until this happens, we maintain our negative trading bias.

In the absence of a firm price signal to indicate an interim low has been established, 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.

Towards the downside, the immediate support is set at 1,573 pts, ie the low of 14 May. This is followed by the 1,550-pt mark. Conversely, the immediate resistance is eyed at 1,621.5 pts, the high of 9 Aug. This is followed by 1,660.5 pts, the high of 24 Jul.

Source: RHB Securities Research - 20 Aug 2019