Maintain long positions while waiting for the correction to reach an end. The FKLI failed to sustain its intraday gain. It closed 1 pt lower at 1,585.5 pts, after oscillating between 1,584.5 pts and 1,598 pts. The inability to hold on to its intraday gains points to the past three weeks’ correction, which took place below the 1,621.5-pt immediate resistance, is still not showing signs of hitting its bottom. This correction phase is deemed as healthy, as it corrects the rebound that took place between 10 Oct and 12 Nov. As the countertrend rebound is still likely to be extended, upon completion of the correction, we maintain our positive trading bias.

As the rebound is likely to be extended, traders are recommended 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.

Immediate support is pegged at 1,564.5 pts, the low of 21 Oct, followed by 1,547.5 pts, the low of 10 Oct. Conversely, the immediate resistance is still 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 - 27 Nov 2019