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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

CoT traders majority short Dow, up majority buy Nasdaq bias

Rising coronavirus cases and fears of restrictions dent appetite, with Facebook’s plunge hurting the tech-heavy index.

Dow Source: Bloomberg

Dow Technical analysis, overview, strategies, and levels

Despite a positive start last week with better than expected economic data, its price failed to finish above its 100 and 50-week moving averages, and testing daily pivot points in weekend trading. On Friday, all its components finished lower save for wholesaler Costco, the losses heaviest for financials' Goldman, JPMorgan and American Express, with NIKE in the mix following its earnings release that showed total sales down 38% despite a big increase in online sales. All US sectors finished lower with the contraction largest for communication and financials, and where defensive utilities and much-needed health contracted the least.

Dow Technical Indicators Source: IG charts

IG client* and CoT sentiment for Dow

In sentiment, we've had a shift from majority short at the start of last week to a majority long 56% as shorts unwind and longs initiate, while on the CoT (Commitment of Traders) front they haven't budged from their heavy short 76% with similar 400+ lot increases in both long and short positioning.

Dow sentiment Source: IG charts

Dow chart with retail and institutional sentiment

Dow Source: IG charts

Nasdaq Technical analysis, overview, strategies, and levels

It wasn't as tough a week for the Nasdaq making a fresh intraweek high before closing lower for the session, and once again testing buy strategies on a lack of upside momentum as its bull trend technical overview starts to stall at the highs, and price starts to reach the lower end of its daily bull trend channel. Amongst its components, Facebook took the largest loss on Friday after more companies halted US advertising on its social media platform. The rise in coronavirus cases making travel site Expedia second from the bottom in terms of suffering contraction, with Alphabet (Google) and Netflix not that far off in terms of percentage losses. In earnings, Micron will be releasing its figures, the computer hardware producer recently improving its outlook.

NASDAQ Technical Indicators Source: IG charts

IG client* and CoT sentiment for Nasdaq

As for sentiment, the lack of a big retracement has kept retail bias in majority short territory, while CoT speculator bias has jumped to a heavy long 68% on a 2,528 lot reduction in shorts.

Nasdaq sentiment Source: IG charts

Nasdaq chart with retail and institutional sentiment

Nasdaq Source: IG charts

DAX Technical analysis, overview, strategies, and levels

The weekly losses for the German DAX were minimal, and while a buy breakout opportunity was on offer on the gains late last week, it eventually finished the session lower to give contrarian sells the outperforming strategy. Overall, its price is near its main long-term weekly moving averages (and its 200-day MA) and in turn offering plenty of false signals, with its weekly bull trend line barely holding as its price stalls near the 12,000 level. Only a handful of its components were up by the close including real estate company Vonovia and Beiersdorf, the rest finishing lower with the losses excruciating for Wirecard after it filed for insolvency. The financial services provider aside, Deutsche Bank and auto companies' BMW and Daimler were the bottom three underperforming for the session.

DAX Technical Indicators Source: IG charts

IG client* and CoT sentiment for DAX

In sentiment, after briefly shifting to the middle, retail traders are starting the week with a slight 51% majority short bias, and needing little to shift to majority long.

DAX sentiment Source: IG charts

DAX chart with retail and institutional sentiment

DAX Source: IG charts

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am.

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This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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