Adjusting trailing-stop; maintain short positions. The FKLI shed 5 pts to close at 1,588 pts yesterday, and trading ranged between 1,585.5 pts and 1,596 pts. The index has been holding above the 1,573-pt immediate support level over the past three weeks or so. However, with the latest weak performance, the bulls were unable to confirm 4 Sep’s “Bullish Harami” formation. As such, the possibility of a stronger rebound developing is still considered low, for now. Towards the upside, the upside breach of the 1,600-pt round figure is a prerequisite for a stronger rebound to develop. For now, we stick to our negative trading bias.

Since the index is still not able to signal that an interim low has been established, 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 1,600-pt mark.

Immediate support is set at 1,573 pts, ie the low of 14 May. This is followed by the 1,550-pt mark. On the other hand, we maintain 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 - 10 Sept 2019