Pending signs for a deeper retracement; maintain long positions. The FKLI experienced a relatively sharp decline in the latest trade. At the closing, it settled 19.5 pts lower at 1,593.5 pts. Intraday tone was negative as the index generally trended lower the entire session, with the high and low recorded at 1,610 pts and 1,592.5 pts. The negative performance also placed the index below the previous immediate support of 1,597 pts. This was after the index came in close to test the 1,621.5 pts resistance point in the prior session. For now, we are of the view that further negative price actions are needed to signal that the countertrend rebound, which started from the low of 10 Oct, has reached its peak. For now, we keep to our positive trading bias.

As further negative price actions are needed to confirm a change in the bias, traders are advised to remain in long positions. We initiated these at 1,565 pts, the closing level of 14 Oct. To manage risks, a stop-loss can be set at the breakeven point.

We revise the immediate support to 1,564.5 pts, which was the low of 21 Oct, followed by 1,547.5 pts, the low of 10 Oct. Moving up, the immediate resistance is still pegged 1,621.5 pts, the high of 9 Aug. This is followed by 1,635 pts, near the 200-day SMA line.

Source: RHB Securities Research - 14 Nov 2019