Maintain short positions. The HSIF saw selling pressure extend yesterday. It plummeted 654 pts to settle the day session at 27,809 pts. After starting Tuesday’s session at 28,098 pts, sentiment became risk-off and saw the index sliding to the 27,744-pt day low before settling at 27,809 pts. The HSIF dropped further during the evening session to the 27,623-pt low. The index managed to recoup some losses and bounced back to close the evening session at 27,923 pts. After falling below the previous 28,000-pt support level, it made a fresh “lower low” bearish pattern. Coupled with the 50-day SMA line turning south, the selling pressure may follow through in the coming sessions and bring the HSIF to re-test March’s 27,503-pt low. Since the bears are in the driver’s seat now, we stick to our negative trading bias.

We recommend traders maintain the short positions initiated at the closing level of 3 May’s day session, ie 28,133 pts. For risk-management purposes, the initial stop-loss level is set at 28,900 pts.

The immediate support is revised to March’s low of 27,503 pts and followed by the 27,350-pt whole number. Conversely, the immediate resistance is revised to 28,223 pts and followed by 28,650 pts.

Source: RHB Securities Research - 12 May 2021