Dow, Nasdaq and DAX retrace slightly, fresh shorts close out

Dow Technical analysis, overview, strategies, and levels

The Dow underperformed compared to Nasdaq yesterday, offering a buy-on-reversal opportunity off of yesterday's 1st Support level. While a report cast doubt about Moderna's coronavirus vaccine, it has done little to shift the index's relatively bullish technicals. Amongst its components only Intel and Nike finished slightly higher, the rest suffering losses with Boeing and energy giants in the bottom. In earnings, Walmart beat estimates with the retail giant enjoying a surge in e-commerce, while higher costs at Home Depot meant its earnings failed to match analysts' expectations. Share prices of both ended the session lower (retail giants but non-Dow components' Target and Lowe's release their earnings today). US housing data was mixed, but both building permits and housing starts were well below previous figures.

IG client* and CoT sentiment for the Dow

Retail short bias has dropped on the retracement as fresh shorts unwind.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

There was less action for the Nasdaq yesterday which finished slightly lower after making intraday fresh highs, failing to reach either of its key pivot points and in turn failing to offer a play off of its main levels. Amongst its components, Take Two was the outperformer while Expedia lost the most, with both companies set to release their earnings today. NetEase was an outperformer yesterday following its earnings that easily beat estimates for the first quarter, its share price surging further in after hours.

IG client* and CoT sentiment for Nasdaq

The lack of retracement here has meant there's been little chance for retail shorts that initiated on Monday's surge to unwind, keeping majority short bias in heavy territory and unchanged at 66%. That stands in contrast with the Dow and DAX where bigger price drops have given shorts a chance to close out and in turn resulted in bigger decreases in majority short bias.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Although futures are pointing higher this morning, yesterday's retracement meant the German DAX finished the session in the red, its price staying within its average daily ranges and in turn failing to offer a pivot point play. While there were plenty finishing the session in the red including personal-care product maker Beiersdorf and Wirecard, there were quite a few that managed to end in the green including semiconductor manufacturer Infineon and MTU Aero Engines. The technical overview remains bullish but no doubt has been stalling within these ranges, with another big move the likes of which we saw on Monday could finally take its price above its short-term resistance level.

IG client* sentiment for the DAX

In sentiment, as with the Dow, a slight retracement is all that's needed for range-trading and averaged-in shorts to close out, the bias dropping from 69% to a majority short 60% as of 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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