Maintain short positions. The E-Mini Dow took a pause following Tuesday’s strong correction by adding 90 pts yesterday to settle at 34,265 pts – it pared down its intraday gains to close mildly positive. The index started stronger at 34,239 pts and then attempted to go higher up to the mid-Asian trading session, but this was shortlived – the EMini Dow touched the day’s high at 34,451 pts before shifting to a downtrend, which saw the index falling sharply to hit the day’s low at 34,168 pts before bouncing off to reclaim the space above the opening at the close. The latest candlestick with long upper shadow that emerged yesterday – with strong selling pressure emerging below the immediate resistance of 34,499 pts – indicate the bears remain in control. The bearish momentum is expected to persist if the E-Mini Dow breaches the 34,121-pt immediate support – resulting in a “lower low” bearish pattern. Backed by the weak RSI near the 40% level, this hardens the view that the bearish trend remains intact. As such, we keep to the bearish trading bias we shifted to during our previous note.

We suggest traders stick to the short positions initiated at 34,175 pts, ie the closing level of 29 Sep. To mititgate risks, the initial stop-loss mark is set at the 34,934-pt resistance, which is above the 50-day average line.

The nearest support level is adjusted to 34,121 pts – 28 Sep’s low – which is followed by 33,478 pts, ie 20 Sep’s low. The resistance levels are unchanged at 34,499 pts – 15 Sep’s low – and 34,934 pts, or 27 Sep’s high.

Source: RHB Securities Research - 30 Sept 2021