Maintain long positions. Investor sentiment turned cautious on Monday, and the FKLI shed 20.50 pts to close weaker at 1,587.50 pts. Yesterday, the index gapped down and opened at 1,605 pts. The negative momentum dragged the index down throughout the rest of the session, and it printed the day’s low of 1,584 pts before closing – thereby erasing the bulk of the gains made since 15 Feb. Despite the heavy profit-taking, the index remained above the immediate support of 1,581.50 pts. On 15 Feb, it recorded long white candlestick, so we believe that the bulls will not give up the immediate threshold easily. If the index breaches the immediate threshold in the coming sessions, expect negative momentum to accelerate and lead the FKLI to undergo a further downward correction. For now, as the trailing-stop remains intact, we will hold on our positive trading bias.

We advise traders to maintain the long positions initiated at 1,527.50 pts or the close of 3 Feb. To minimise the downside risks, the trailing-stop threshold is set at 1,581.50 pts.

The immediate support has shifted lower to 1,581.50 pts (15 Feb’s low), followed by 1,558 pts or the low of 11 Feb. Conversely, the nearest resistance is pegged at the 1,600-pt psychological level, followed by 1,620 pts or the high of 17 Feb.

Source: RHB Securities Research - 22 Feb 2022