Stay short, with a new trailing-stop set above the 23,450-pt level. The downward movement of the E-mini Dow continued as expected, as another black candle was formed last Friday. It plunged 590 pts to close at 22,407 pts, off the session’s high of 23,249 pts. Market sentiment remains bearish, as the index has marked a lower close vis-à-vis the previous sessions since 14 Dec. This may also further extend the downside swing that started from early December. In view that the 21-day SMA line is likely to turn lower, the bearish sentiment has therefore been enhanced.

As seen in the chart, we are now eyeing the immediate resistance level at 23,450 pts, which is near 20 Dec’s high and 17 Dec’s low. The next resistance is maintained at 24,086 pts, determined from the high of 19 Dec. On the other hand, the near-term support level is seen at the 22,000-pt psychological spot. This is followed by 21,579 pts, determined from the previous low of 21 Aug 2017.

To re-cap, on 5 Dec, we initially recommended traders to initiate short positions below the 25,500-pt level. We continue to advise them to stay short for now, while setting a new trailing-stop above the 23,450-pt threshold. This is in order to lock in a larger part of the profits.

Source: RHB Securities Research - 24 Dec 2018