Initiate long positions as the correction phase probably reached an interim low. The FKLI ceased the latest session stronger by 5 pts at 1,568 pts. This was after it reached a low and high of 1,560 pts and 1,570 pts. The positive session has in our view confirmed the index’s recent retracement has probably reached an end. This was after it recently retested the 1,547.5-pt immediate support twice. This implies the index would now resuming its countertrend rebound phase. Towards the upside, we are expecting, at the minimum, for the 50-day SMA line to be retested. Switch our trading bias to positive.

Our previous long positions initiated at 1,564 pts, the closing level of 29 Nov, were closed out at the breakeven point in the latest session. As the countertrend rebound could be resuming, we initiate long positions at the latest closing. To manage risks, a stop-loss can be placed at below 1,547.5 pts.

The immediate support is still set at 1,547.5 pts, the low of 10 Oct, followed by the 1,500-pt level. Meanwhile, the immediate resistance is pegged at 1,588.5 pts, the high of 29 Nov. This is followed by 1,621.5 pts, the high of 9 Aug.

Source: RHB Securities Research - 9 Dec 2019