Maintain long positions. The E-Mini Dow experienced a sudden push, halfway through the session, coming close to testing the record intraday high of 30,325 pts, with a high of 30,321 pts. However, selling pressure emerged from this point, sending the index to a low of 30,084 pts, before it narrowed its losses to 42 pts, to close at 30,161 pts. While the index’s uptrend is still intact, we believe the latest negative performance near the record high threshold continues to suggest that the trend is losing momentum. Recall that the index has been consistently retracing, each time it touched a new intraday high over the past five weeks – indicating the emergence of selling pressure. However, a downside breach of the 29,848-pt support level is required to signal the commencement of a correction phase. Based on the trend following perspective, we keep our positive trading bias.

For now, we recommend traders stay in long positions. We initiated these at 30,033 pts, or the closing level of 11 Dec. For risk-management purposes, a stop-loss can now be placed below the 29,848-pt mark.

The immediate support target is maintained at 29,848 pts, followed by 30 Nov’s low of 29,428 pts. On the upside, the immediate resistance is set at 30,325 pts – the record intraday high on 14 Dec – followed by 30,500 pts.

Source: RHB Securities Research - 17 Dec 2020