Maintain short positions. The HSIF continued to extend its rebound from the recent low of 22,964 pts, advancing 325 pts to close at 23,755 pts. We are seeing the recent sessions’ positive moves as counter-trend in nature and that it has yet to cancel the overall weak technical picture given that the index is still trading firmly below the previous multi-month uptrend line and also both the 20- and 50-day SMA lines, both of which are also curving lower. Additionally, the RSI is still well below the neutral threshold. Hence, we are keeping our negative trading bias.

We advise traders to stay in short positions. We initiated these at 24,924 pts, which was the closing level of 3 Sep. For risk-management purposes, we maintain the trailing stop-loss level at the 23,771-pt mark, which was the day high of 24 Sep.

The immediate support is revised to 23,264 pts, which is the low of 30 Sep. This is followed by 22,964 pts – derived from the low of 28 Sep. On the upside, the immediate resistance is eyed at 24,100 pts, ie near the 20-day SMA line, followed by 24,600 pts, near the 50-day SMA line.

Source: RHB Securities Research - 6 Oct 2020