Maintain short positions, as there is no strong positive follow-up to the “Doji” yet. The FKLI gained 2 pts to close at 1,557 pts yesterday. The low and high were recorded at 1,556 pts and 1,562 pts. The index has been showing signs of merely developing a minor consolidation after the appearance of the “Doji” formation on 4 Oct – this implies there is still no confirmation that it is ready to stage a stronger rebound. Prospects for stronger rebound may emerge if the FKLI breaches 1,566.5 pts, the high of 3 Oct. Until this happens, we keep to our negative trading bias.

Without a clear price reversal signal to mark the beginning of a counter-trend rebound, traders are recommended to remain in short positions. We initiated these at 1,668 pts, the closing level of 12 Jul. To manage risks, a stop-loss can be placed above the 1,566.5-pt level.

Immediate support is expected to emerge at the 1,550-pt mark, followed by 1,500 pts. On the other hand, the immediate resistance is set at the 1,600-pt level, followed by 1,621.5 pts, the high of 9 Aug.

Source: RHB Securities Research - 9 Oct 2019