Maintain short positions. The E-mini Dow ended higher to form another white candle yesterday. It rose 336 pts to close at 28,014 pts, off the session’s low of 27,675 pts. Still, the appearance of 4-6 Dec’s white candles indicate that the market may be experiencing a technical rebound after the losses seen lately. As the index failed to recoup the losses from 2-3 Dec’s black candles, this implies the negative sentiment stays intact. Overall, we believe the downside swing – which started from 2 Dec’s long black candle – may continue.

Judging from the current outlook, the immediate resistance level now situated at the 28,197-pt historical high. The next resistance will likely be at the 28,500-pt round figure. On the other hand, we are eyeing the immediate support level at 27,312 pts, which was obtained from the low of 3 Dec. Meanwhile, the next support is seen at 26,847 pts, ie the previous low of 31 Oct.

Therefore, we advise traders to stay short, since we originally recommended initiating short below the 27,650-pt level on 4 Dec. At the same time, a stop-loss set above the 28,197-pt threshold is preferable to minimise the risk per trade.

Source: RHB Securities Research - 9 Dec 2019