Market hits its new low in 2018; stay short. Selling momentum in the E-mini Dow continued as expected, as another black candle was formed last night. It declined 314 pts to close at 23,002 pts, off its high of 23,449 pts and low of 22,644 pts. Based on the current technical landscape, yesterday’s candle has marked a lower close below the declining 21-day SMA line – and also sent the E-mini Dow to its lowest point in 2018. This indicates that the downward momentum has extended. Overall, we remain bearish on the E-mini Dow’s outlook.

According to the daily chart, the immediate resistance level is seen at 24,086 pts, ie the high of 19 Dec. The next resistance is anticipated at 24,844 pts, which was the high of 12 Dec. Towards the downside, we anticipate the immediate support level at 22,644 pts, ie the low of 20 Dec. If a breakdown occurs, the next support is situated at the 22,000-pt psychological mark.

Hence, we advise traders to maintain short positions, in line with our initial recommendation to have short positions below the 25,500-pt level on 5 Dec. A trailing-stop is preferably set above the 24,086-pt threshold in order to secure part of the gains.

Source: RHB Securities Research - 21 Dec 2018