Stay short while setting a new trailing-stop above the 25,215-pt level. The E-mini Dow’s downward momentum continued as expected after it formed a black candle last Friday. It lost 370 pts to close at 24,820 pts, off the session’s high of 25,191 pts. From a technical perspective, the market retracement is likely to continue, as the index has taken out the 24,862-pt support mentioned previously and marked a lower close below the declining 21-day SMA line. Moreover, last Friday’s black candle sent the E-mini Dow to its 4-month low, thereby enhancing the bearish sentiment. Overall, we keep our bearish view on the index’s outlook.

Based on the daily chart, we are now eyeing the immediate resistance level at 25,215 pts, set near the lows of 13-14 May. The next resistance is seen at the 26,000-pt round figure, also situated near the high of 9 May. To the downside, we now anticipate the near-term support level at 24,284 pts, which was the low of 28 Jan. This is followed by the 24,000-pt psychological spot.

To re-cap, on 10 May, we initially recommended traders to initiate short positions below the 26,000-pt level. We continue to advise them to stay short for now, while setting a new trailing-stop above the 25,215-pt threshold. This is in order to secure part of the gains.

Source: RHB Securities Research - 3 Jun 2019