Initiate long positions, as the interim low may be in place. The E-Mini Dow extended its positive close for a third consecutive session, ending 580 pts stronger at 27,376 pts – this was after it generally trended higher for the entire session. The closing level placed the index above the 27,000-pt mark, hence, in our view, confirming that the E-mini Dow’s correction phase – which started from early September – has recently reached an interim low, given the multiple retesting of the 200-day SMA line. While its RSI is still below the 50 neutral threshold, the indicator has started to show improvements as well. Hence, we switch our trading bias to positive from negative.

Our previous short positions – initiated at 28,100 pts, or 19 Oct’s closing level – were closed out at 27,000 pts during this latest session. Concurrently, we initiate long positions. To manage risks, a stop-loss can be placed below the 26,600-pt threshold.

The immediate support is revised to the 27,000-pt round figure and followed by 26,600 pts. Meanwhile, the immediate resistance is now eyed at 27,800 pts – near the 50-day SMA line – and followed by the 28,000-pt round figure.

Source: RHB Securities Research - 4 Nov 2020