Maintain short positions. The FKLI oscillated between the positive and negative territory, in the range of 1,669.5 pts and 1,685.5 pts, before closing 0.5 pt better at 1,678 pts. The rebound off the session’s low happened after the index tested the immediate support of 1,672 pts. Despite the indecisive performance, in a bigger picture, we still see a high possibility of the index trading in the early stages of a multi-week correction phase. In this correction phase, we are expecting the index to retrace towards July’s “Double Top” high of 1,621.5 pts. This comes following the previous six weeks’ rally off the low of 1,449 pts posted on 2 Nov. Maintain our negative trading bias.

We recommend traders to stay in short positons. We initiated these at 1,665.5 pts – the closing level of 14 Dec. To manage risks, a stop-loss can be set above 1,700 pts.

The immediate support target is set at 1,672 pts, followed by 15 Dec’s low of 1,654 pts. Moving up, the immediate resistance is envisaged at 1,691.5 pts – the high of 16 Dec, followed by 1,700 pts.

Source: RHB Securities Research - 18 Dec 2020