Maintain long positions; set a trailing stop. The FKLI surged 4.04% yesterday – the second-best performance this year after 20 Mar (+7.76%). As mentioned previously, the stellar performance during the last two sessions may be due to the risk-on sentiment or short-covering activities. The index started the session at 1,527 pts and dipped to the 1,517- pt low. Once it found a support, it started to moved higher towards 1,538 pts. A breach of 1,538 pts sent the FKLI skyrocketing towards the 1,586-pt day high. The index settled at 1,585 pts, or 68 pts from the low. With such a wide candle, we do expect some minor corrections or profit taking activities in the coming sessions. Traders should consider a tight stop-loss in such a volatile environment. Since the major trend is still bullish, we maintain a positive trading bias.

We recommend traders stay with long positions. We initiated these at 1,509 pts, which was the closing level of 5 Nov. To limit downside risks and protect profits, we set a trailing stop below 1,568.5 pts.

The immediate support will be 1,568.5 pts – 24 Aug’s low – and followed by 1,550 pts. On the upside, the immediate resistance is pegged higher at the 1,600-pt round number and followed by 1,621.5 pts, or the high of 14 Jul.

Source: RHB Securities Research - 11 Nov 2020