Dow and DAX power higher, Nasdaq tested

Dow Technical analysis, overview, strategies, and levels

It was a strong finish for the Dow yesterday to aid conformist buy breakout strategies where financials outperformed as a sector, and for the Dow's components it was American Express, Goldman Sachs, and JPMorgan Chase the top three performers (Boeing's share price rose following plans to lay off 12,000 with thousands more planned, surging in afterhours on news it will restart MAX production). The few that were in the red included Walmart and Pfizer. All US sectors finished higher, but tech shares were the relative underperformers alongside communication on rising US-Sino tensions. Expect those tensions to remain high with a planned US response likely to be revealed soon.

IG client^* and CoT sentiment for Dow

In sentiment, majority short bias remains heavy amongst retail traders, who have upped their bias to 69% as longs get enticed into closing out and shorts get stuck.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

The Dow outperformed once more, and although this time around the Nasdaq managed to finish higher, it wasn't by much. Technical overview conformist strategies also outperformed here, with a buy-on-reversal off of yesterday's 1st Support level (not a fading strategy that would have been stopped out). Amongst its components, Micron outperformed after it raised its earnings estimates followed by Ulta Beauty ahead of its earnings release today (Costco and Dollar Tree will also be releasing their figures). There are plenty of negative factors to contend with including fallout from any US action against China, as well as companies whose share prices could get volatile on exposure to the US President's signing of an executive order today regarding social media.

IG client^* and CoT sentiment for Nasdaq

In sentiment, the intraday plummet gave a chance for fresh shorts to close out, and majority short bias has dropped to 57%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

The European Commission's €750bn proposal certainly aided sentiment in the bloc, even if it's application won't be until next year. And for the German DAX, it was a powerful finish higher with its price crossing and closing above its 100-day moving average, and aiding conformist breakout strategies despite the intraday reversal prior to the move higher. Auto shares were relative outperformers amongst its components with Daimler on top and BMW outperforming as well, with the handful finishing in the red including Merck and Fresenius.

IG client^* and CoT sentiment for DAX

In terms of sentiment, retail short bias is still in heavy sell territory but has dropped a notch to 69%, as longs get enticed into closing out and range-trading shorts enter more cautiously.

DAX chart with retail and institutional sentiment

*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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