Maintain short positions. Selling pressure on the FKLI moderated yesterday, and the index gained 5 pts to close at 1,519.50 pts. After a sell-off on Monday, it started Tuesday’s session stronger at 1,519.50 pts. Investor sentiment was weak in the early morning, and the index fell to test the day’s low of 1,512. It then bounced up to to reach the intraday high of 1,524 pts, before moving sideways and closing. Although there was brief buying interest, it should still trade below the 50-day SMA line. This, coupled with the RSI trending below the 50% threshold, compels us to believe that the positive momentum may not strong enough to penetrate the overhead resistance of the 50-day SMA line or the 1,530-pt immediate resistance. As such, the FKLI may consolidate sideways until the next breakout. At this stage, we make no change to our negative trading bias.

Traders should stick to short positions that were initiated at 1,569.50 pts, or the close of 2 Sep. To manage trading risks, the trailing-stop threshold is revised to 1,535 pts.

The immediate support is set at 1,510 pts or the high of 11 Aug, followed by the 1,500-pt psychological level. Meanwhile, the first resistance is at 1530 pts, then at 1,542.50 pts, the low of 15 Sep.

Source: RHB Securities Research - 21 Sept 2021