Stop-loss triggered; initiate short positions. The FKLI failed to stay above the psychological level of 1,600 pts, and shed 22 pts to settle at 1,580.5 pts yesterday. After a strong rebound on Monday, the index opened flat at 1,601 pts yesterday. However, the bulls became wary after the upside momentum faded, then shied away from the market. As such, the FKLI declined to the day’s low of 1,574 pts, breaching our pre-set stop-loss. Although the index managed to close higher, at 1,580.5 pts, we believe that the bearish sentiment is building up. With the negative momentum, the corrective phase will see the index testing the next support of 1,572.5 pts. Meanwhile, a breach above the 1,600-pt mark may see the end of the correction. With the latest negative price action, we switch to a negative trading bias.

Our previous long positions – initiated at 1,590.5 pts or the closing level of 13 Nov – were negated after the stop-loss was triggered at 1,577 pts. As such, we now initiate short positions. To manage risks, a stop-loss can be set above 1,603 pts.

The immediate support is revised to 1,572.5 pts, followed by 1,560 pts. Towards the upside, the immediate resistance is pegged at 1,600 pts, followed by the Hanging Man resistance of 1,613 pts.

Source: RHB Securities Research - 25 Nov 2020