Maintain long positions as we expect the countertrend to bounce back. The FKLI failed to sustain its earlier session’s positive tone, and closed 10 pts lower at 1,558 pts. Trading took place between 1,557.5 pts and 1,571.5 pts. However, we did not regard the latest negative performance as an indication that the index’s countertrend rebound has reached an end. We maintain that the rebound that resumed after it recently retested the 1547.5 pts in still firmly in place. Towards the upside, it could, at the minimum, reach the 500-day SMA line.

As the index still has the potential to extend its rebound, we recommend that traders remain in long positions. We initiated these at 1,568 pts, the closing level of 6 Dec. To manage risks, a stop-loss can be placed below 1,547.5 pts.

The immediate support is pegged at 1,547.5 pts, the low of 10 Oct, followed by the 1,500-pt level. On the other hand, the immediate resistance is eyed 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 - 10 Dec 2019