Maintain short positions. The FKLI saw a strong technical rebound yesterday, jumping 7.50 pts to settle at 1,526 pts – climbing nearer towards the 50-day SMA line. The index initially started on a weaker note, gapping down to begin at 1,512.50 pts and rapidly falling to the session’s low of 1,505 pts. Not long after the index formed its intraday low, the tides changed. The bulls recouped the intraday losses and lifted the index to touch the session’s high of 1,528.50 pts just before the close. As we mentioned in the previous note, strong buying interest emerged at the 1,1512-pt immediate support – the bulls managed to take control in the latest session. In the event the positive momentum follows through in the coming sessions, the index may attempt to reclaim the 50-day SMA line. At this stage, the FKLI has yet to form a fresh “higher high”. So, we stick to our negative trading bias until the stop-loss is triggered.

Traders should retain short positions initiated at 1,520 pts, or the closing level of 1 Oct. To manage trading risks, the stop-loss is set at 1,535 pts.

The immediate support is marked at 1,512 pts, the low of 21 Sep, followed by the 1,505 pts (5 Oct’s low). Conversely, the immediate resistance is kept at 1,535 pts, followed by the higher resistance of 1,550 pts.

Source: RHB Securities Research - 6 Oct 2021