Maintain long positions as the countertrend rebound remains. The FKLI ended the latest session slightly better by 0.5 pt at 1,596 pts. The low and high were posted at 1,593 pts and 1,599 pts. The latest two sessions’ price actions suggest that there is still no follow-up from the 13 Nov’s sharp decline. This means we are still not seeing the risk for the index to experience a sharp retracement. All in, the countertrend rebound that started from the low of 1,547.5 pts on 10 Oct is still in place. Maintain our positive trading bias.

As the rebound is still not showing any signs of reaching an end, 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.

Towards the downside, the immediate support at 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 at 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 - 18 Nov 2019