Maintain long positions. The FKLI saw selling pressure intensify during Thursday’s session, retracing 7.50 pts to settle weaker at 1,514.50 pts. Initially, the index opened at 1,520.50 pts and jumped to the day’s high of 1,525.50 pts. However, the bears seized the opportunity and dragged the index towards the day’s low of 1,512 pts before the close. The latest session showed the bears are back in the driver’s seat. In the event the negative momentum follows thorough, the index may drop to 1,512 pts, followed by the 1,505-pt support. Breaching that support will attract further selling pressure. Nevertheless, we still keep our view that the index might stage a mean-reversion play and swing towards the 50-day SMA line. As such, we hold on to our positive trading bias until the stop-loss is breached.

Traders should keep the long positions, which were initiated at 1,532 pts, or the closing level of 12 Nov. To mitigate the trading risks, the initial stop-loss has been set at 1,500 pts.

The immediate support is marked at 1,512 pts, or the low of 11 Nov, followed by 1,505 pts, or the low of 5 Oct. Conversely, the immediate resistance remains at 1,537.50 pts (9 Nov’s high), followed by 1,546.50 pts (3 Nov’s high).

Source: RHB Securities Research - 26 Nov 2021