Bearish trend still intact; maintain short positions. The FKLI closed on the weak side yesterday, settling 8 pts lower at 1,892.5 pts. The low and high were at 1,581.5 pts and 1,593.5 pts. The weakening commenced after the index attempted to cross the 1,600-pt level in the last three sessions – indicating that the bulls are still struggling to take control from the bears. If the index remains capped by the immediate resistance of 1,621.5 pts, the weak bias that started from early July would still be intact. We maintain our negative trading bias.

As the bears are still showing a firm control over the negative price trend, traders are advised to stay 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 still expecting the immediate support emerge at 1,573 pts, the low of 14 May. This is followed by the 1,550-pt mark. Moving up, the immediate resistance is set 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 - 27 Aug 2019