Maintain short positions. The E-Mini Dow oscillated between a low and high of 28,077 pts and 28,378 pts, before ending 48 pts lower at 28,134 pts. The index has been trading slightly above the 50-day SMA line over the recent sessions, not showing signs of developing a positive price reversal from this support line. This implies the correction phase, which started from the high of 28,846 pts registered on 12 Oct, is still firmly in place. A downside breach of the said SMA line could see the index retrace towards – at the minimum – the 27,500-pt level. Maintain our negative trading bias.

As the bulls are still unable to signal a change in control, we recommend traders stay in short positions. We initiated these at 28,100 pts, which was the closing level of 19 Oct.

The immediate support is kept at the 28,000-pt round figure, which is also near 15 Oct’s low. This is followed by 27,500 pts. Conversely, the immediate resistance is maintained at the 28,500-pt mark, and followed by 28,700 pts, which was a price point on 16 Oct.

Source: RHB Securities Research - 22 Oct 2020