Maintain short positions. After the Thanksgiving holiday on Thursday, the E-Mini Dow saw a strong selling pressure last Friday as it crossed below the nearest two support levels by falling 891 pts to settle at 34,858 pts – it also crossed below the 50-day average line. The index began at 35,778 pts and merely hit the day’s high of 35,900 pts before moving strongly southwards towards the close. It hit the day’s bottom 34,626 pts before bouncing off moderately to close at 34,858 pts – it attempted to partially recoup its intraday losses. The latest negative momentum shows the bears deciding to write off recent profits above 35,383 pts, as the support level has broken. The E-Mini Dow, which is currently trading below the 50-day SMA line, has firmed up its bearish momentum in the medium term, in line with the weakening of the RSI heading towards the 30% level. We expect the downtrend to persist towards near the 200-day SMA line in the medium term. Unless the momentum reverses and breaches the initiated trailing-stop threshold – above the 50-day average line – we maintain our bearish trading.

Traders are advised to keep the short positions initiated at 35,992 pts, ie the closing level of 10 Nov. To manage the trading risks, the trailing-stop mark is initiated at 35,383 pts.

The immediate support is set at 34,626 pts – 26 Nov’s low – and followed by the 33,984-pt round figure or 13 Oct’s low. The immediate resistance changes to 35,383 pts – 27 Oct’s low – and is followed by 35,900 pts.

Source: RHB Securities Research - 29 Nov 2021