No signal for a stronger rebound; maintain short positions. The FKLI settled the latest session marginally lower by 0.5 pt at 1,591 pts. Activities took place in the range of 1,582.5 pts and 1,598 pts. Overall, the index is still trading weakly. The latest performance also meant there was no positive follow-up from the prior session’s relatively strong performance. To signal the possibility for a stronger rebound to develop, the prior session’s high of 1,595 pts has to be crossed at the closing. Until this happens, we stick to our negative trading bias.

As the bulls are still unable to signal a stronger rebound, 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.

Towards the downside, 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. On the other hand, we are keeping the immediate resistance target 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 - 6 Sept 2019