Dow and Nasdaq post big gains, DAX recovers

Dow Technical analysis, overview, strategies, and levels

All eyes are on the key US indices to see whether it'll entice the US Federal Reserve (Fed) into reacting sooner than the expected March Fed meeting whereby money markets continue to fully price in a 0.25% rate cut, though ahead of time equities have been surging anticipating easing. All the Dow’s components were in the green, the biggest gains in Apple and Walmart. US sector performance had none in the red, with defensive utilities posting the biggest gains, and followed by tech stocks. There are a few low-impacting items this evening out of the US as well as political focus on US Democratic primaries and the results of Super Tuesday. But the real focus for equities will likely be on the G7 conference call between finance ministers today, to see if they'll take coordinated action.

IG client^* and CoT sentiment for Dow

In sentiment, retail bias has shifted from majority long to majority short.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

As with the Dow, the Nasdaq was in for a recovery that has undone a significant chunk of last week’s plummet, even if it underperformed percentagewise when compared with the Dow. Amongst its components, Tesla surged back up and was one of the clear outperformers. But there were a few in the red including American Airlines, travel site Expedia, and Marriott. The technical overview for indices remains volatile awaiting the latest updates regarding the coronavirus, as well as what the monetary and fiscal policy reaction will be (or to what extent easing will be applied).

IG client^* and CoT sentiment for Nasdaq

Here too, retail bias has shifted from a previous majority long 56% to a slight majority short 52%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

German data yesterday showed its manufacturing PMI continue to contract with a sub-50 reading but a couple notches above expectations. That's not to take away from the current dismal event given the effects of the coronavirus on not just the Chinese market, but also its spread globally and how it'll influence demand for German export products. Compared to US indices, the German DAX didn’t recover as well, and there were quite a few of its components still in the red with losses heaviest for Lufthansa and Deutsche Bank. Defensive utilities RWE was leading the gains, and of the automaker’s shares only VW was in the green.

IG client^* and CoT sentiment for DAX

The lack of a significant recovery here has meant that retail bias remains in heavy long territory and currently at 65%, unlike the shift in sentiment that was witnessed in both Dow and Nasdaq.

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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