Stay long provided that the 29,100-pt support is not violated at the closing. The E-mini Dow formed a black candle with a long lower shadow last night. It dropped to a low of 28,931 pts during the intraday session, before ending at 29,171 pts for the day. We note that the index is still trading above the 29,100-pt support mentioned previously, which signals that the positive sentiment stays unchanged. The long lower shadow implies that there was an initial selling momentum during the day before the market moved up by the end of the trading session – indicating that the buyers ought to still have control over the market.

For now, the immediate support level is maintained at 29,100 pts, ie the low of 18 Feb. If a decisive breakdown arises, look to 28,850 pts – defined from the previous low of 10 Feb – as the next support. On the other hand, the near-term resistance level is seen at the 29,543-pt record high. This is followed by the 30,000-pt psychological spot.

Thus, we advise traders to stay long, since we initially recommended initiating long above the 28,600-pt level on 5 Feb. A trailing-stop set below the 29,100-pt threshold is advisable in order to secure part of the gains.

Source: RHB Securities Research - 21 Feb 2020