Dow, Nasdaq, and DAX retrace off the lows as trade headlines continue to dominate

Dow Technical analysis, overview, strategies, and levels

It was a day of recovery for indices globally, and the US Dow was no exception to that rule, where nearly all its sectors were in the green, and where energy and financials as a sector outperformed. Its trade talk that has been the driving factor in terms of retracement and fresh highs, and hence any positive developments on that front could easily take the index’s price higher and keeping its stalling bull trend technical overview intact that has been tested in the short-term. Its price is below all its main short-term moving averages but still above all its main long-term ones, and with a trending ADX (Average Directional Index).

IG client and CoT sentiment for Dow

In sentiment, retail bias is majority short though far from extreme short levels witnessed last week, standing at a more modest 62%, opposite institutional bias at an extreme long 79% as per last Friday’s CoT (Commitment of Traders) report.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

As with the Dow (and DAX), the Nasdaq’s technical overview remains bullish but stalling not that far off its recent highs, and where price moves back up have continued to test retail traders who hold a heavier short bias of 70%. More downside bias will be needed for those shorts to unwind, especially as the bulk of those have been initiated at lower price levels.

IG client and CoT sentiment for Nasdaq

Any further trade optimism could take its price back up and reinitiate the squeeze on shorts. As for bias amongst larger speculative traders, last Friday’s CoT report puts it at a majority long 61% and little changed from the week before.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

It was a wobbly start to the week for the DAX, and tariffs on EU products certainly has dented sentiment on the continent. However, thus far its been primarily on French products, but should there be any unified retaliation from the bloc, and it could easily expand to include German automobiles, hitting the German DAX in the process. From a technical overview it remains a stalling bull trend where more of its indicators are shifting back to neutral on the daily outlook, but where should any positive ‘risk-on’ plays occur with investors seeking risk, and it’ll breathe new life into its technical overview.

IG client and CoT sentiment for DAX

In sentiment, retail bias was at a heavy short 68% yesterday, and has since risen to near extreme short levels at 75% as range-trading longs get enticed into closing out, and shorts initiate (and average-in) anticipating retracement back down.

DAX chart with retail and institutional sentiment