Maintain long positions on the expectation of a countertrend rebound developing. The FKLI ended the latest session higher by 2 pts at 1,567 pts. The low and high were posted at 1,565 pts and 1,569.5 pts. The positive performance is a follow-up from the prior session’s “Upside Gap”. This also implies that the rebound from the 1,547.5- pt level is still extending. All in, we believe the index’s retracement phase has reached an interim low (1,547.5 pts) and it is likely in the process of developing a counter-trend rebound. Towards the upside, at the minimum, we are expecting the immediate resistance of 1,573 pts to be tested. Maintain our positive trading bias.

As the bulls are still showing signs of extending the index’s counter-trend rebound, we continue to recommend that traders stay in long positions. We initiated these at 1,565 pts, which was the closing level of 14 Oct. For risk management purposes, a stop-loss can be set below 1,547.5 pts.

The immediate support is expected to emerge at 1,547.5 pts, which was the low of 10 Oct, followed by 1,500 pts. On the other hand, the immediate resistance target is set at 1,573, the low of 14 May. This is followed by the 1,600-pt level.

Source: RHB Securities Research - 16 Oct 2019