Big retail gains in Dow, Nasdaq, and DAX as heavy short bias drops significantly on short profit-taking
US manufacturing contraction dents risk appetite as investors flee to safety.
DOW: Equities take a big hit following manufacturing contraction
It was a big wake-up call for investors to see US manufacturing suffering a consecutive contraction that was at its worst pace in nearly a decade, as rising trade risks and recessionary fears continue to give safe haven a leg to stand on. That meant that riskier assets like equities were in for a retreat, and as a result the index’s stalling bull trend has taken another hit, with little needed at this stage to take its price below its main long-term moving averages (MA) given the 50-day and 100-day aren’t that far off. Retail traders won big time, as bias dropped 18% as range-trading shorts took profit and longs initiated. In terms of outperforms, Apple was one of the few that avoided a price drop, and with energy and financials lagging significantly.
NASDAQ: Finishing in the red but relatively outperforming
Given it’s a tech index with less reliance on manufacturing, the Nasdaq’s finish wasn’t as harsh as that of the Dow, though its price did cross back below its 50-day moving average, and with its 100-day MA not that far off. Given it was a smaller price drop retail shorts had less of a chance to take profit, and as a result majority short bias is down only 3% to a more modest 58% majority sell.
DAX: Mid-term resistance level holds as US manufacturing contraction hurts shares globally
While the Institute for Supply Management’s (ISM) manufacturing Purchasing Managers’ Index (PMI) figure pertains to the US, its contraction has had wide-reaching consequences, and hurting Asian indices as of this morning. The German Dax couldn’t avoid the drop either, and with its mid-term resistance level holding it has aided retail traders significantly who were stuck with heavy short positions prior to the move. Retail bias is down 19%, and should further consecutive and significant price drops occur and we could easily see a shift in bias to majority short given the heavy range-trading that occurs here.
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