Maintain long positions. The E-Mini Dow staged a strong rebound above the 200-day SMA line yesterday, rising 373 pts to settle at 35,342 pts. The index began at 35,001 pts. After touching the 35,382-pt session low, it moved higher throughout the session, and closed near its intraday high of 35,426 pts. As mentioned in our previous note, we observed that the bulls have formed a strong interim base near the 200-day SMA line, printing a long lower shadow on 4 Feb and 7 Feb. As long as the index continues to trade above this long-term moving average line, it may attempt to reclaim the 50-day SMA line and 35,590-pt resistance level. Meanwhile, the 200-day SMA line will act as strong downside support. With the RSI crossing above the 50% threshold – as the bulls regain control – we are keeping our positive trading bias.

Traders are advised to hold on to the long positions initiated at 34,997 pts or the closing level of 31 Jan. For risk-management purposes, the stop-loss is set at 34,800 pts.

The immediate support stays at 34,800 pts, followed by 33,928 pts, or the low of 1 Dec 2020. Meanwhile, the immediate resistance remains at 35,590 pts – 2 Feb’s high – followed by 36,390 pts, which was 13 Jan’s high.

Source: RHB Securities Research - 9 Feb 2022