Consecutive gains for Dow, Nasdaq and DAX ahead of tier 1 data and ECB event
Equities enjoy a week of gains thanks to reduced risks, though absence of a trade solution puts price increases in question ahead of ECB this week and the Fed next week.
DOW: Positive technical bias returns thanks to last week’s risk-on appetite
It was a second week of consecutive gains for US equities, this time boosted by US-China trade talks and a mixed NFP on Friday. However, easing expectations have dropped following Fed Chair Powell’s speech last week, and a lack of easing out of the US central bank next week could dent the index’s ability to rise higher, especially with a lack of action yet given US-China trade talks scheduled for next month. But that hasn’t stopped institutional bias from rising, now at an extreme long 90% and standing in significant contrast to retail traders who have upped their heavy long bias by 6% to an extreme short 76%.
NASDAQ: Technicals positive ahead of more US tier 1 data
As with the Dow, positive technical bias has returned for this index, though was fueled by risk-on appetite last week that will always be at risk of being undone given that US-China trade talks will take place next month and offer no guarantee of it translating into action that will keep current supply chains in place and avoid a tech war. Most of the index’s main technical indicators are back at positive and with a trending ADX, though breakout strategies will depend more on whether the current uptick in investor sentiment can be sustained. In event news, Apple is scheduled to announce its new iPhone and watch models tomorrow. In the background, institutional bias remains at a modest majority long 60% while retail bias has increased by 6% to a heavy short 72% on long profit-taking and fresh short initiation.
DAX: Back above all its main weekly moving averages ahead of the ECB’s event
It’s a big week for anything ECB related, including European equities that have avoided suffering significant losses thanks to investor expectations that the central bank with offer easing that will end up in bond-buying and forcing money back into riskier assets like the German DAX’s companies, even if the manufacturing powerhouse is on the verge of a recession. Given the ECB’s event is expected to be volatile, its consolidatory technical overview’s conformist strategies will be in favor of breakout strategies, and contrarian on reversal. Going into this week’s event retail traders are heavy short at 66%, up a notch on last week as longs get enticed into taking profit.
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