Stick to short positions. After much volatility, the FKLI broke past the 1,500-pt psychologcial level yesterday, closing 8 pts higher at 1,500.50 pts. The index initially opened stronger yesterday, gapping up at 1,494 pts, then underwent strong momentum in the early session to test the intraday high of 1,510 pts. Then, in the afternoon, the bears were once again eager to take profits, dragging the index lower to its close of 1,500.50 pts – leaving a long upper shadow. As we mentioned in a previous note, as long as the index surpasses the psychological level, sentiment would be improved – and the bulls would attempt a rally. With the latest long upper shadow, the index has to close above 1,508 pts to spark a stronger momentum. For now, we maintain a negative trading bias until the index closes above the trailing-stop convincingly.

Traders should stick to short positions, which we initiated at 1,569.50 pts, or 11 Jun’s close. To manage trading risks, the trailing-stop is set at 1,508 pts.

The immediate support has been revised to 1,493 pts, the low of 11 Aug, followed by the lower support of 1,477.50 pts or the low of 4 Aug. Meanwhile, the immediate resistance is pegged at 1,508 pts – the low of 14 Jul, then at 1,525 pts or 9 Jul’s high.

Source: RHB Securities Research - 12 Aug 2021