Dow and DAX short-term technicals suffer, Nasdaq perseveres

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Please note that the release of CoT figures were delayed from last Friday to tonight, and hence will be reflected in tomorrow’s institutional sentiment on the Daily Market report.

Dow Technical analysis, overview, strategies, and levels

Harsh finish for the Wall Street last Friday which resulted in a significant red week, cyclicals taking a hit and resulting in clear underperformance here, prices breaking beneath key levels following last Wednesday's Federal Bank's (Fed) event and the central bank speak that followed from Bullard on Friday, and giving contrarian breakout strategies the clear advantage in both time frames.

Zooming out to the weekly and the overview is still a bull trend, albeit stalling heavily and where little is needed to shift as its price hovers near a key short-term support level, increased volatility persisting meaning breakout strategies may outperform.

All its components finished in the red, losses heaviest for sectors like energy and financials putting Chevron Corp (All Sessions) and Goldman Sachs BDC Inc amongst those in the very bottom. We'll get more Fed speak tonight, and with more members including Chairman Powell tomorrow, it'll be a busy week digesting central bank talk.

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IG client* and CoT** sentiment for the Dow

Dow chart with retail and institutional sentiment

Nasdaq technical analysis, overview, strategies, and levels

A week in the red for plenty, but the US Tech 100 wasn't one of them, as it finished slightly up even after Friday's pullback. Prices failed to reach previous weekly levels, and gave contrarian breakouts a slight edge on the daily after Thursday's volatility took prices beyond its previous first resistance level before retracing back down on Thursday.

Lowered inflation expectations in the long-term on QE withdrawal is considered a plus for growth over value, with any consistency in long-term yields failing to rise (or even dropping further) a sigh of relief for the heavily indebted corporate sector.

DocuSign Inc (price target increase), Okta Inc, and Adobe Systems Inc (All Sessions) (earnings beat, stronger guidance) were on top in terms of component performance, but most were in the red on Friday with semiconductors some of those hit hardest, 6159-JP in the very bottom, suffering its second downgrade in two days.

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IG client* and CoT** sentiment for Nasdaq

As for sentiment, price gains have meant retail sell bias has risen from 56% to 61%.

Nasdaq chart with retail and institutional sentiment

DAX technical analysis, overview, strategies, and levels

As with the FTSE 100, a big plummet for the Germany 40 following what had been relatively oscillatory moves near the highs, and taking prices beneath its previous weekly first support level while aiding contrarian breakouts on the daily time frame thanks to Friday's big pullback. Most of its components were in the red by the finish, and big losses for Henkel AG & Co KGaA, Infineon Technologies AG, and Covestro AG. From a technical standpoint, a brief glance at the weekly chart and the latest setback is seen as a dent in what had already been a heavily stalling bear trend technical overview where buy-breakout strategies remained tested on a lack of upside momentum while downside moves shook out longs with ease.

As for German data, PPI beat estimates with a 7.2% year-on-year increase, and a sizable 1.5% month-on-month. The Bundesbank is expected to release its monthly report today.

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IG client* sentiment for the DAX

Range-trading is usually heaviest here so a big move following days of small price changes results in big sentiment shifts, a previous heavy sell 76% at the start of last week now a majority buy 59%.

DAX chart with retail 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 for the outer circle. Inner circle is from the previous trading day.}

^{**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.}