Dow, Nasdaq, and DAX end the week in the red

Dow Technical analysis, overview, strategies, and levels

When it comes to indices, the Dow was a relative underperformer, failing to make fresh record highs intraweek and ending in the red and suffering heavily at the end of it. Most of its components suffered on Friday, with tech stocks' Microsoft and Apple leading the losses, and Boeing not that far off as the travel sector feels the pain from the effects of the coronavirus. Sector performance for the US showed nearly all in the red with tech stocks suffering the most, and both consumer discretionary and communication also lagging. Only real estate and consumer staples were in the green. Last week’s Weekly 1^st Support level barely held, and on the daily it crashed beneath its key pivot points on a classic risk-off move.

IG client^* and CoT sentiment for Dow

That was good news for retail traders whose short bias has dropped from a heavy short 68% to 63%, while CoT (Commitment of Traders) bias is down a couple notches but still in extreme long territory.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

The tech sector suffered on Friday with the Nasdaq’s components mostly in the red, and AMD and Nvidia both at the bottom. The result was a break beneath last week’s Weekly 1^st Support level even if it wasn’t by much. On the daily its bull trend technical overview has been tested heavily, but a brief look at the weekly chart and far more will be needed to undo its technical overview of a stalling bull trend. Retail shorts were big beneficiaries of Friday’s move, the bias down 12% since the start of last week as short traders breathed a sigh of relief.

IG client^* and CoT sentiment for Nasdaq

Institutional sentiment remains majority long and has risen to 57% on an increase in Nasdaq consolidated long positions by 886 lots and a simultaneous reduction in shorts by 1,049 lots.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

With equities in for a reversal in a classic risk-off move, the DAX was no exception to the outflows with most of its components in the red including auto shares and Deutsche Bank at the bottom, and only a few outperformers such as Allianz following better than expected Q4 profit, raising its target for 2020. Friday’s manufacturing data for Germany was better than expected but still contracting, and more German data will be released today in the form of IFO’s figures. Last week’s Weekly 1^st Support level managed to hold despite the losses, but it offered little beyond it on a buy strategy, with the daily pivot points clearly broken especially on Friday’s plummet.

IG client^* and CoT sentiment for DAX

Retail traders aren’t complaining on the latest moves, with range-trading shorts squeezed on the move towards a record high able to unwind and push the bias 9% lower from a previous extreme short 82% at the start of last week.

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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