Dow and Nasdaq struggle for the week, CoT bias remains short

Dow Technical analysis, overview, strategies, and levels

Pullback off record highs for the Dow though within its previous Weekly levels and in turn failing to offer a play, on the Daily contrarian breakouts winning out as its price broke through Thursday's 1st Support level. A brief glance at the Weekly and its clear its price is still near record highs, helping keep its key technical boxes flashing green. However, lack of upside intraday (or even intraweek) momentum on most days/weeks has meant it’s an overview that is stalling and easily susceptible. US data late last week disappointed when it came to employment but impressed in manufacturing, and aside from more housing data it's mostly about central bank speak. Losses on Friday were heavy for financial stocks following the Fed's SLR update, less components finishing higher that included Home Depot and Walmart.

IG client^* and CoT^** sentiment for Dow

As for sentiment, CoT speculators are still heavy sell but with longs up by 1,209 and shorts down by 1,596 lots, they're at 67%.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

A red finish for the Nasdaq, albeit slight for the week despite the big pullback last Thursday that gave contrarian strategies a clear edge. The move late last week has already shifted plenty of its technical boxes on the Daily (which have been prone to shifting more easily), on the Weekly its bull trend overview stalling heavily and enticing contrarian strategies should yields continue their ascent, the bond market looking to central bank speak throughout the week and some bond auctions. Facebook (CEO Zuckerberg says Apple's privacy update will help) and NetEase were the outperforming components on Friday, while on the other end Baidu and CSX suffered.

IG client^* and CoT^** sentiment for Nasdaq

As for sentiment, amongst CoT speculators they remain majority short and unchanged at 55% on a drop in both long and short positions by about 1.1K lots each. Retail bias remains heavy buy at 68%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Although the DAX managed to finish higher for the week, it wasn't without pullback and in turn its price stayed mostly within its levels, conformist buy breakout strategies on Thursday's Daily giving far less than contrarian reversal strategies. Even if all its technical boxes are flashing green in both time frames and recently offering fresh record highs, it's remained a struggle for plenty of indices to offer intraday/week upside momentum beyond key levels, and hence the 'stalling' feature for its technical overview. In component performance it was Delivery Hero and Deutsche Wohnen the outperformers in the clear minority, losses big for MTU Aero Engines and Covestro. Reports that there's a draft proposal to extend the lockdown in Germany have yet to be confirmed.

IG client^*sentiment for DAX

As for retail bias, any pullback is a big boon for extreme sell trader bias that have shorted into these price gains, sentiment dropping from 82% at the start of last week to 78%. CoT sentiment isn't available for the DAX, but for US indices they are majority short Dow and Nasdaq, majority long Russell, and shifted to a slight sell in the S&P.

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 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.

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