Fresh record highs for Dow and Nasdaq fueled by tech and takeovers

Dow Technical analysis, overview, strategies, and levels

A gap higher followed by a fresh record close for the Dow, buoyed by a surging tech sector that outperformed combined with improved risk appetite on the announcement of takeovers. Nearly all its sectors were in the green, with tech shares and health care at the top. In trade news, a phone call held between both sides (US and China) this morning on "core issues of concern" though nothing as of yet put on paper. As for US data, a string of it this evening includes trade data, housing, consumer confidence, and manufacturing where one individually may not make a difference, but where collectively could offer a move in risk appetite (for better or worse depending on the data).

IG client and CoT sentiment for Dow

In sentiment, retail bias isn’t rising however, with a drop in heavy short sentiment to 72% from a previous 76% yesterday morning, suggestive of fresh longs entering as opposed to averaging in to the short side anticipating retracement.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

With tech shares outperforming yesterday, the Nasdaq’s weekend gap higher was followed by a fresh record close for the tech index, and keeping nearly all its main technical indicators flashing green. Whether it can continue to offer intraday gains on buy breakout strategies remains yet to be seen, as intraday trend traders have had a tendency to get tested on what has been relatively limited intraday gains.

IG client and CoT sentiment for Nasdaq

Unlike the Dow where retail short bias is dropping as fresh longs get enticed into entering, that hasn’t been the case here as traders short the short-term resistance level anticipating retracement back down, and where retail short bias has instead risen a notch to 77%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

For the German DAX, yesterday's better than expected IFO business climate figures did little in terms of shifting the mood for this index's price, whereby it too gapped higher and managed to close only slightly higher, no doubt aided by what has been a ‘risk-on’ atmosphere in the US where investors seek riskier assets as opposed to safe haven ones like gold or bonds. More German data is on the way, with GfK's consumer climate released today, and preliminary CPI (Consumer Price Index) figures on Thursday.

IG client and CoT sentiment for DAX

In sentiment, retail bias has reacted to the slightly higher gains in a similar fashion to traders in the Nasdaq, with the extreme short bias rising to 78%.

DAX chart with retail and institutional sentiment