Dow, Nasdaq and DAX recover off of the lows

Dow Technical analysis, overview, strategies, and levels

It was a day of retracement for the Dow, failing for the second consecutive session to cross and close above its 200-day moving average, with a move this morning below yesterday's 1^st Support level. Most of its components finished in the red, the losses heaviest for energy giants' ExxonMobil and Chevron. No surprise then, that the energy sector was hardest hit, with financials and real estate in second and third from the bottom. Housing data may have been a disappointment yesterday, but there are other fresh factors to contend with including coronavirus cases, US-China tensions that could pick up following sanctions legislation signed yesterday, and domestic political risk. The technical overview is more bullish on the weekly, and on the daily while volatility hasn't subsided just yet, its price is just below the last of its main long-term moving averages and combined with a positive DMI (Directional Movement Index) and trending ADX (Average Directional Movement Index).

IG client^* and CoT sentiment for Dow

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

Unlike the Dow, the damage in the tech-heavy Nasdaq was far smaller, and doing little to dent its current bull trend technical overview that has stalled at the highs, and offered little intraday momentum with its price opting to stay within yesterday's key pivot points. Amongst its components Marriott and Dollar Tree fell the most, with those gaining including BioMarin Pharmaceuticals on top, and stocks that outperformed during heavier lockdown restrictions recovering, even as government officials said that the US would not lock down again. For big tech companies, the US justice department’s proposals yesterday have had little effect thus far, and would likely remain the case unless it progresses significantly further.

IG client^* and CoT sentiment for Nasdaq

The lack of a retracement in Nasdaq's price has meant that shorts haven't been able to unwind as easily as has been the case in the Dow, with majority short bias rising here instead to 60%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

A slight finish higher yesterday and getting briefly battered this morning as Asian stocks went into the red providing a quick reversal off of today's 1^st Support level. As of its close, only a handful of its components finished in the red including VW and airliner Lufthansa, with Wirecard finishing on top. From a technical standpoint, its price has managed to stay above the last of its main moving averages (MA), the 200-day MA, and where the 50-day is closing in on the 100-day MA as seen on the daily chart. A lack of German data today and low-impacting PPI (Producer Price Index) figures tomorrow means overall risk appetite and Friday's expected European Council meeting on the massive coronavirus recovery fund may be larger determinants for the DAX's price.

IG client^* and CoT sentiment for DAX

In sentiment, price gains here usually translate into heavier short bias as more range-trading shorts enter, with the sell bias amongst retail traders rising to 61%.

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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