Dow, Nasdaq and DAX finish slightly higher but tested this morning
Despite gains momentum lacking intraweek (and most often intraday), testing breakout strategies and extreme short retail traders.
Dow Technical analysis, overview, strategies, and levels
A fresh record high for the Dow following positive trade comments by White House Economic Advisor Kudlow on Friday that a US-China phase one trade deal could be close, reinforced by Chinese state media over the weekend saying “constructive talks” were held on a trade call on Saturday. There were few underperformers on Friday, but where both Disney and Walmart lagged, the latter's share price retreating after beating estimates. In terms of sectors, nearly all of them finished in the green with health care outperforming and followed by tech. However, despite the record highs, intraweek it failed to reach the upper end of last week’s 1st Resistance level as both intraweek and intraday momentum has been (on average) limiting. As for this week, Home Depot will be announcing its earnings (amidst the release of other US housing data this week), as well as some retailers.
IG client and CoT sentiment for Dow
In sentiment, the record highs have been squeezing retail shorts who now stand at an extreme short 81%, nearly opposite CoT (Commitment of Trader) bias of an extreme long 83%.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Friday’s move gave the tech index a fresh record high, but that aside the week witnessed relatively limiting movement that has been testing intraweek (and intraday) trend traders looking for breakout opportunities, as well as short-term options traders banking on increased volatility that hasn’t panned out. The index’s price was within its inner pivot points last week even if it finished higher, and Friday’s losers were few with Nvidia at the bottom in the red after fluctuating prior on its earnings release that beat estimates.
IG client and CoT sentiment for Nasdaq
Retail bias here has also pushed higher into extreme short levels and is identical to that of the Dow at 81%, while CoT long bias is at a more modest 64% with little change in long and short positioning keeping that percentage unchanged since the end of the week before.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
While US indices have been on a roll posting fresh record highs, the DAX spent the week in very range-bound movement as its bull trend technical overview continues to stall at current price levels, even if all its main technical indicators continue to flash green. In terms of sectors, auto shares did outperform with Daimler the exception near the bottom, as auto companies await any news out of the US regarding a tariff decision on EU autos.
IG client and CoT sentiment for DAX
As for retail traders, extreme long bias has dropped to 77% from 82% at the start of last week (whereas with US indices it has risen given there have been fresh record highs there).
DAX chart with retail and institutional sentiment
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