Maintain short positions as there are no indications from the bulls. The FKLI extended its multi-week sideways trading pattern in the latest session. At the closing, the index settled 2.5 pts softer at 1,589.5 pts. The low and high were posted at 1,587.5 pts and 1,594.5 pts. The weak closing below the 1,600-pt level meant the 4 Sep’s “Bullish Harami” is still unconfirmed, thus capping the prospects of the index to mark an interim low for a stronger rebound to take place. All-in, the weak bias that resumed following the 2 Jul’s failed attempt to cross the 1,700-pt level, is still in place. Maintain our negative trading bias.

As the bulls are still unable to break away from the sideways trading zone, 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.

We are keeping the immediate support target 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 eyed at 1,621.5 pts, or the high of 9 Aug. This is followed by the 1,660.5-pt mark, ie the high of 24 Jul.

Source: RHB Securities Research - 20 Sept 2019