Dow futures pointing higher after a week that finished in the red
CoT sentiment shifts to slight sell from slight buy, retail trader bias still majority short though out of heavy sell territory.
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Bit more volatility in the financial markets, general economic growth concerns and virus variant woes failing to subside with lockdowns and state of emergency either initiated or extended over the past week, Covid-19 cases nearing 213 million, deaths above 4.4 million, and in vaccine news Pfizer submitting early data on boosters to the FDA, according to one report potentially getting full FDA approval for its Covid-19 vaccine today. Reinforcing the weakening economic data story, retail data out of the US was a miss as the fade from the boost to spending from economic reopening and stimulus checks suggested we might be in for a slowdown in economic growth, manufacturing data according to both New York and Philadelphia Federal reserve (Fed) a clear miss. Unemployment claims at a 17-month low was a positive, on the housing front mortgage delinquencies for July dropping closer to pre-Covid-19 levels but where the risks amongst those in serious delinquency didn’t subside, mortgage applications dropping for the week ending August 13 contracting by nearly 4%. Central bank speak from the Fed’s Powell failed to offer anything new with an unconfirmed report of Yellen’s recent backing a boost for his chances of staying on as chairman, while minutes out of the US central bank showed division amongst its members over key issues, but where tapering could occur later this year.
Dow Technical analysis, overview, strategies, and levels
As for the Dow, a spike in volatility and a red finish last week even if it managed to recover partially by the end, the moves testing conformist buy strategies in this time frame while aiding conformist breakouts on the daily where its 'consolidation - volatile'. A brief glance at the weekly chart and it puts the latest scare into perspective with prices still not that far off the highs, and equity fund inflows still occurring (according to Lipper data), though any further downside volatility would attract contrarian strategies in this time frame or at the very least buy-reversals only after a significant reversal. A negative DMI cross has occurred here, though its remaining technical boxes are still neutral. We've got manufacturing and services data out of Markit, and more housing data with existing home sales.
| Current technical overview | Bull trend- stalling |
| Technical overview conformist strategies | Buy 1st support after reversal, buy 1st resistance upon breakout from below |
| Technical overview contrarain strategies | Sell 1st resistance at/before price, sell first support upon breakout from above |
| S/L for 2nd resistance | 36378 |
| 2nd resistance | 36125 |
| S/L for 1st resistance | 35872 |
| 1st resistance | 35619 |
| Relative starting point | 35113 |
| 1st support | 34607 |
| S/L for 1st support | 34354 |
| 2nd support | 34101 |
| S/L for 2nd support | 33848 |
Meanwhile, CoT speculators have shifted to slight sell 52% from an exact opposite slight buy 52% prior, longs down 2,322 lots, shorts up 1,095. Retail trader bias was near extreme short territory at the start of last week, the plummet giving sell positions a chance to close out some of those fresh and averaged-in shorts.
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