Maintain short positions. The E-Mini Dow extended its losses yesterday, sliding 260 pts to settle at 33,996 pts. It initially started the session stronger at 34,295 pts, rising to the session high at 34,423 pts. Moving into the European trading hours, the selling pressure accelerated as the day progressed – the index dropped to as low of 33,907 pts. It rebounded slightly to close at 33,996 pts, still falling short below the 34,000-pt psychological level. As sentiment turns wary, coupled with the RSI indicator pointing downwards, a likely negative momentum will follow through in the coming sessions, which will see the E-Mini Dow re-testing the 33,926-pt support level. Breaching the support will see the index heading back towards the 50-day SMA line. Premised on the recent negative momentum, we retain our negative trading bias.

We recommend traders stick to the short positions initiated at 34,183 pts, or the closing level of 11 May. For risk management purposes, the stop loss is revised to 34,400 pts.

The immediate support remains at 5 May’s low of 33,926 pts, followed by 13 May’s 33,200-pt low. On the upside, the immediate resistance is sighted at 34,382 pts, while the next hurdle is pegged at 34,700 pts.

Source: RHB Securities Research - 19 May 2021