Dow and Nasdaq retrace off fresh record highs last week

Dow Technical analysis, overview, strategies, and levels

Although the Dow made a fresh record high intraweek, it couldn’t hold onto those gains later in the week as trade optimism – part of the catalyst for recent gains – faded in the face of renewed US-China uncertainties on the trade and political front. Real estate and energy shares were at the bottom on Friday in terms of sector performance, while financials outperformed. The lack of intraweek movement has meant its bull trend technical overview on both the daily and weekly continues to show signs of stalling, and rarely reaching its main pivot points let alone offering anything beyond that.

IG client and CoT sentiment for Dow

Retail bias was at extreme short levels of 81% at the start of last week, and the slight retracement has eased the pressure off averaged-in shorts to take that bias to a heavy short 76% at the start of this week. As for CoT (Commitment of Traders) bias, it has dropped 5% from an extreme long 83% to a heavy long 78% on a reduction in shorts by 1,971 lots and a simultaneous increase in longs by 1,364 lots.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

Little difference between the Nasdaq and the Dow in terms of performance, with both struggling to post and hold onto fresh record highs last week. Its price didn’t reach last week’s Weekly 1^st Resistance in a sign of strained momentum that is testing its stalling bull trend on both Weekly and Daily levels. In terms of performers (or lack thereof), Tesla was at the very bottom on Friday with a 6% drop in its price following the unveiling of its pickup truck, with rival popular pickup truck makers’ Ford and GM shares rising instead.

IG client and CoT sentiment for Nasdaq

From a sentiment standpoint, retail bias here has dropped 5% to a heavy short 76% (identical to that of the Dow), while CoT bias here has instead dropped to a majority short 62% on a slight reduction in longs and a smaller increase in short positions.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

As with the other indices, it’s been relatively limited and range-bound movement for the German DAX's price that has kept it within last week’s Weekly 1^st Resistance and 1^st Support levels, failing to offer a breakout strategy in either direction. Germany’s final GDP figure on Friday confirmed a 0.1% reading, ensuring the manufacturing powerhouse had avoided a recession. That being said, preliminary PMI (Purchasing Managers Index) figures were mixed with manufacturing continuing to contract even if not worse than expected, while services disappointed.

IG client and CoT sentiment for DAX

On the sentiment front, retail bias is unchanged since the start of last week at an extreme short 77%.

DAX chart with retail and institutional sentiment