Dow, Nasdaq, and DAX finish the week in the green, retail shorts remain tested

Dow Technical analysis, overview, strategies, and levels

A fresh record high last week that couldn't stick, though zooming out to the weekly its bull trend technical overview remains intact despite Friday’s retracement that has kept the short-term overview volatile in anticipation of moves beyond its key pivot points in either direction. Few of its components were in the green on Friday, with materials and tech sectors leading the losses. This week we'll see earnings from consumer discretionary and retail, and should coronavirus fears persist and it’s likely the sector could get hit, with US retail data this Friday as well.

IG client^* and CoT sentiment for Dow

Retail bias was in heavier short territories towards the middle of last week as shorts got stuck, but Friday’s retracement was a slight relief taking the bias to a heavy short 68%, far higher than the start of last week’s slight majority short 53% bias. As for larger speculative traders according to the latest CoT (Commitment of Traders) report, the bias remains in extreme long territory but dropping slightly on a larger increase in Dow short positions than long positions.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

The Nasdaq was aa relative outperformer again last week as tech stocks were mostly outperformers, even if Friday was a day of slight retracement off the highs. The index’s price surged past last week's Weekly 1st and 2nd Resistance levels, stalling closer to the highs once more, as the gains here have usually been on one day and thereafter switching back to limited intraday gains and offering intraday traders less of an opportunity for buy breakout opportunities.

IG client^* and CoT sentiment for Nasdaq

More so than the Dow, retail bias here is heavy short as the opportunity to close out short positions has been less as the tech index outperforms. Institutional bias is majority long and little changed with an insignificant reduction in long positions and a small increase in short positions.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Although Friday was a red day with most of its components contracting and auto shares and airline stocks at the bottom, it couldn’t take away from what was a stellar week for the DAX rising from its short-term support level towards its short-term resistance level and running contrary to its consolidatory range-bound overview as the gains were swift. However, the source of this movement has remained risk-related, and hence volatility strategies when significant risk moves occur have been more ideal.

IG client^* and CoT sentiment for DAX

Retail bias here has shifted from what was a slight majority long 52% to a now heavy short 77% (having risen to 79% on Thursday), as range-trading the German index continues to remain the preferred strategy amongst retail traders following a few months of oscillating at the highs.

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%.

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