Maintain short positions. The FKLI ended the latest session positively. At the closing, it settled 13 pts higher at 1,591.5 pts. The session’s tone was encouraging as the index generally moved higher for the whole session, the low and low were posted at 1,579 pts and 1,595 pts. The positive session came after the index came near to test the 1,573- pt immediate support level in the previous session. A “Bullish Harami” formation has also appeared. However, in a broader picture, the index’s negative trend that started from early July is still firmly in place. Towards the upside, should the index manage to close above the latest session’s high, a stronger rebound phase may develop. Until this happens, we keep to our negative trading bias.

Pending a positive follow up in the coming sessions to signal a stronger rebound is taking place, traders are recommended to stay in short positions. We initiated these at 1,668 pts, or the closing level of 12 Jul. To manage risks, a stop-loss can now be placed above the 1,595-pt mark, the latest session’s high.

The immediate support is still pegged at 1,573 pts, ie 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, or the high of 9 Aug. This is followed by 1,660.5 pts, ie the high of 24 Jul.

Source: RHB Securities Research - 5 Sept 2019