Dow, Nasdaq, and DAX finish the week in the red following risk averse moves

Dow Technical analysis, overview, strategies, and levels

Despite mostly better than expected earnings thus far, there were a few Dow components in the green yesterday which included IBM and Disney, the latter announcing its earnings tomorrow. At the bottom were energy shares like those of ExxonMobil and Chevron following disappointing earnings out of the former, and mixed earnings out of the latter, and where the current oil prices plummet will dent future earnings out of the oil giants. Apple share prices also plummeted, as its store and office closure in China are expected to influence sales in the Chinese market. The index’s price broke past last week’s Weekly 1st Support level without offering a reversal opportunity, and no doubt contrarian traders are anticipating an undoing of recent gains as its daily technical overview shifts.

IG client^* and CoT sentiment for Dow

Retail bias here is near the middle and on the verge of shifting after dropping 16% from last week’s heavy short 69%, while CoT bias rose to extreme long levels at 84% on a closure of short positions and hence haven’t been beneficiaries of the latest moves.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

Unlike the Dow and DAX, the Nasdaq’s performance over the course of last week managed to minimize Friday’s damaging plummet, whereby Amazon outperformed after its earnings beat expectations but where most of the rest of its components were in the red. Alphabet (Google) is up next set to announce its earnings today, but as always coronavirus fears and risk-related flows may prevent the tech index from outperforming should negative news persist.

IG client^* and CoT sentiment for Nasdaq

While retail bias has plummeted in both Dow and DAX, given the lack of a price drop it hasn’t translated into a big chance for retail shorts to unwind in profit, and hence the bias over the course of last week has only dropped by 4% and remains in heavy short territory. CoT (Commitment of Traders) bias however, shows that larger speculative traders have upped their bias to a majority long 60% on a closure of short positions by 2,571 lots and a small increase in long positions by 506 lots.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

All of the DAX’s components were in the red on Friday, as the price plummet took the index’s value towards a short-term support level as seen on the weekly ,and forced a technical overview shift that’s more consolidatory at the highs, but vulnerable to breakout opportunities should more fundamental news emerge that would entice contrarian strategies over conformist reversals. Furthermore, we’ll get manufacturing PMI (Purchasing Managers Index) figures for Germany today.

IG client and CoT sentiment^* for DAX

In sentiment, retail bias has shifted to majority long plummeting from an 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%.

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