Maintain short positions. The FKLI started the session by attempting to stage a counter-trend rebound. It reached a high of 1,657.5 pts, before being hammered down to a low of 1,639.5 pts. At the closing, it settled 6 pts softer at 1,647.5 pts. The closing level placed the index below the previous immediate support of 1,654 pts. While we highlighted the possibility for a counter-trend rebound to develop following the index’s recent sharp decline, the latest session’s performance suggests the bears are still not willing to make room for the bulls. Broadly, our expectation for the index to retrace towards July’s “Double Top” formation stays intact. Maintain our negative trading bias.

We recommend that traders stick to 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 at the breakeven mark.

The immediate support is revised 1,621.5 pts – the high of July’s “Double Top”, this is followed by the round figure of 1,600 pts. Meanwhile, the immediate resistance is envisaged at 1,657.5 pts – the latest high. This is followed by 1,670 pts.

Source: RHB Securities Research - 22 Dec 2020