Stay in short positions, as the index has likely entered a correction phase. The E-mini Dow gained 371 pts to settle at 25,536 pts. The positive session came after the index experienced a sharp decline during the prior session, which saw the 200-day SMA line give way. This can be seen as a minor pause by the bears. With the said downside breach, we believe the E-mini Dow is likely in the process of developing a multi-week correction phase to rectify its upward move between the third week of March and early this month.

Our previous long positions, initiated when the index crossed above the 24,000-pt level on 19 May, were closed out at the 26,250-pt mark on 11 Jun. Concurrently, we initiate long positions at the same day’s closing at 25,165 pts. A stop-loss can be placed above the 26,600-pt threshold.

The immediate support is revised to the 25,000-pt round figure – also near the lows of the two latest sessions. This is followed by 24,250 pts, which is close to the 50-day SMA line. Conversely, the immediate resistance is pegged at 26,000 pts and followed by the 26,600-pt mark.

Source: RHB Securities Research - 15 Jun 2020