Maintain short positions in the absence of a price reversal signal. The FKLI failed to hold on to its earlier session’s gains, sliding from a high of 1,565 pts to close at 1,555 pts – this indicated a decline of 3 pts. The negative session meant there was no positive follow-up from the prior session‘s “Doji” formation, which indicates indecisiveness. This implies the weak bias that resumed on the failed attempt to cross the 1,700-pt level on 2 Jul is still not showing signs of hitting an end yet. This negative bias should stay as long as the index is still capped by 1,566.5 pts – the high of 3 Oct. We stick to our negative trading bias. As there is still no price confirmation from the bulls to signal the prospects for a stronger rebound developing, traders are advised to remain in short positions. We initiated these at 1,668 pts, or the closing level of 12 Jul. To manage risks, a stop-loss can be placed above the 1,566.5-pt level. We are maintaining the immediate support at the 1,550-pt mark, followed by 1,500 pts. Moving up, the immediate resistance is expected to emerge at the 1,600-pt level. Breaking this may see the market test 1,621.5 pts, or the high of 9 Aug.

Source: RHB Securities Research - 8 Oct 2019