Countertrend rebound has yet to peak; maintain long positions. The FKLI closed 2.5 pts higher, at 1,588 pts, yesterday. This was after it swung between a low and high of 1,583.5 pts and 1,591.5 pts. Overall, we still believe the index is merely undergoing a multi-week correction phase – deemed as healthy, to correct the previous uptrend that took place in 10 Oct-12 Nov. Currently the index is hovering around the 50-day SMA line. In the absence of a breakdown from this SMA line, the risk of it undergoing a deeper correction is still contained. As such, we maintain our positive trading bias.

As such, 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.

Immediate support is set at 1,564.5 pts, the low of 21 Oct, followed by 1,547.5 pts, the low of 10 Oct. On the other hand, 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 - 28 Nov 2019