In short positions. The E-Mini Dow rebounded during the latest session to recapture the 30,000-pt psychological mark – this was after falling below the threshold during the previous session. After a soft start that saw the index dipping to a low of 39,552 pts, it generally trended higher for the rest of the session. It settled 231 pts stronger at 30,110 pts. Despite the positive close, intraday price actions suggest the E-Mini Dow was still struggling to advance back above the 50-day SMA line. All in, we believe the index is likely developing a deeper correction phase after its previous multi-week upward move showed lack of momentum signs. Towards the downside, we are expecting the E-Mini Dow to slide towards the 29,000-pt area.

Our previous long positions initiated at 30,033 pts, or the closing level of 11 Dec 2020, were closed out at 29 Jan’s breakeven level. We also initiated short positions at 29,879 pts, ie the closing level of 29 Jan. For risk-management purposes, a stop loss can be set above 30,850 pts.

Support levels are now expected at 29,900 pts and 29,552 pts – the latest low. On the upside, the immediate resistance is pegged at 30,500 pts and followed by 30,850 pts.

Source: RHB Securities Research - 2 Feb 2021