Dow, Nasdaq and DAX finish higher, overview remains bullish
Lockdown restrictions easing while coronavirus cases top five million.
Dow Technical analysis, overview, strategies, and levels
The Dow finished higher to keep its price close to the highs, but couldn't undo the day before's losses and the buy breakout failed on yesterday's 1st Resistance due to partial retracement. Amongst its components, Disney outperformed followed by Intel, and only a handful were in the red that included Johnson & Johnson (which will stop selling talc baby powder in the US and Canada) and Merck again. All US sectors finished higher with the gains led by energy and communication, health care and utilities gaining the least. Coronavirus cases have topped five million, but the focus is also on lockdown restrictions easing with all US states at least partially reopened. Today we'll get unemployment claims set to show another significant figure lower than last week's 3m increase, and manufacturing and housing data.
IG client* and CoT sentiment for the Dow
As for sentiment, retail short bias has jumped again to a heavy 68%.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Although Nasdaq outperformed slightly compared to the Dow, here too it was contrarian reversals that outperformed somewhat on partial retracement early this morning. Amongst its components, the outperformers included Facebook on its push into e-commerce and Intel, but there were quite a few contracting including Liberty Global and Netflix. Expedia's share price surged in afterhours despite a big drop in revenue and a loss per share that was worse than expected, and today we'll get earnings figures for Nvidia, Intuit, and Ross Stores. Overall risk appetite might be more related to a combination of lockdown restrictions easing and rising coronavirus cases, as well as US data and central bank speak.
IG client* and CoT sentiment for Nasdaq
The gains here and a lack of significant retracement has meant retail short bias has jumped again to heavier short territory, standing at 70% as of this morning.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
It was a significant gain for the DAX, enough to aid buy breakout strategies yesterday over an eventual partial retracement that would have nearly stopped out a contrarian fading sell. Fresenius and Wirecard outperformed, while airplane engine maker MTU Aero Engines was amongst the few that were declining. Airliner Lufthansa is in advanced talks with the German government for a €9bn rescue deal. In terms of German data, we'll get preliminary PMIs (Purchasing Managers Index) expected to show ongoing contraction for both services and manufacturing, but where with lockdown restrictions easing those numbers are set to rise and lift themselves off the lows. The ECB's (European Central Bank) minutes will be released tomorrow.
IG client* sentiment for the DAX
In trader sentiment, retail bias has jumped back up to heavy short territory, from 60% to 68% this morning.
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.
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