Maintain short positions. The FKLI’s rebound stalled near the 1,515-pt immediate resistance yesterday. After hitting a high of 1,515.5 pts, the index slid to settle at 1,501 pts, indicating a 8-pt decline. The FKLI has been attempting to breach above the resistance in the latest two sessions. An upside breach of this threshold would signal an extension of the rebound phase that set in following 11 Sep’s “Bullish Engulfing” formation. This may also see the index retesting the 50-day SMA line. Meanwhile, a downside breach of the 1,476-pt support mark should open the door for a deeper correction to set in. However, for now, we are maintaining a negative trading bias

Until the prospects of a stronger rebound are confirmed, we advise traders to remain in short positions. We initiated these at 1,491 pts, the closing level of 21 Sep. To manage risks, a stop-loss can be set above 1,515 pts.

The immediate support is maintained at 1,497 pts, followed by 1,483.5 pts, the low of 24 Sep. Meanwhile, the resistance points are set at 1,515 pts and 1,525 pts.

Source: RHB Securities Research - 30 Sept 2020