Near-term upside move remains intact; maintain long positions. The E-mini Dow formed a black candle with a long lower shadow last night. It lost 220 pts to close at 26,652 pts, off its high of 26,832 pts and low of 26,483 pts. However, on a technical basis, it is not surprising that buyers may be taking a pause following the recent rise. Yesterday’s long lower shadow implied that there was initial selling pressure during the day, before the market moved up by the end of the trading session. This indicated that the near-term market outlook was still bullish. As shown in the chart, we are eyeing the immediate support at 26,347 pts, which was the low of 28 Sep’s “Hammer” pattern. The next support is seen at 25,764 pts, determined from the previous low of 11 Sep. Towards the upside, we now anticipate the near-term resistance at the 26,966-pt record high. This is followed by the 27,000-pt psychological spot. Thus, we advise traders to stay long, given that we previously recommended initiating long above the 24,600-pt level on 11 Jul. In the meantime, a trailing-stop can be set below the 26,347-pt threshold in order to lock in part of the profits.

Source: RHB Securities Research - 5 Oct 2018