Maintain short positions with a lower trailing-stop loss. The FKLI closed on a weak note yesterday. At one point, it again tested the immediate support of 1,550 pts with an intraday low of 1,547.5 pts. This was before it closed 6.5 pts lower at 1,551 pts. While the index’s RSI is near the oversold reading, the latest negative session means that its weak bias – which resumed on 2 Jul’s failed attempt to cross the 1,700-pt level – is still not showing signs of ending. Towards the upside, should the index cross above 1,558 pts, which was the high of 9 Oct, there is a good possibility that it could stage a rebound. Until this happens, we stick to our negative trading bias.

As the downward move is still showing signs of extending, 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 now be placed above the 1,558-pt level.

Immediate support is still at the 1,550-pt mark, followed by 1,500 pts. On the other hand, the immediate resistance is expected to emerge at 1,573, which was the low 14 May. This is followed by the 1,600-pt level.

Source: RHB Securities Research - 10 Oct 2019