Bulls are still in control; maintain long positions. The FKLI closed 2.5 pts lower at 1,608.5 pts yesterday, after trading ranged between 1,602.5 pts and 1,612.5 pts. While the index has been trading on a soft tone over the past two sessions, there is still no technical evidence that points to an end of the countertrend rebound that has been developing over the past four weeks. The soft sessions can be deemed as the bulls taking a minor pause. In our view, the rebound is meant to correct the downward leg between early July and early October. We maintain our positive trading bias.

As the countertrend rebound could still be extending, traders should 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.

Immediate support is expected at 1,564.5 pts, the low of 21 Oct. This is followed by 1,547.5 pts, the low of 10 Oct. On the other hand, the immediate resistance is at 1,610 pts, the high of 30 Aug. This is to be followed by 1,621.5 pts, the high of 9 Aug.

Source: RHB Securities Research - 12 Nov 2019