Dow, Nasdaq, and DAX suffer big losses, retail bias shifts to majority long in all three

Dow Technical analysis, overview, strategies, and levels

The weekend gap lower that failed to get filled following the Dow’s worst single day percentage loss in two years meant that its price blew past its key support levels and shifted its daily overview to volatile. Coronavirus fears and its spread have translated into a real slowdown in future economic data figures, and is expected to translate into worsening earnings. All its components were in the red lead by UnitedHealth at the bottom, as health care stocks get volatile not just on coronavirus fears, but also on the likelihood of Sanders experiencing more victories in the Democratic primaries. Home Depot will be announcing its earnings today, and there will be housing data released over the next two days, though expect risk-related flows to continue to dominate.

IG client^* and CoT sentiment for Dow

Retail bias has at last shifted as shorts got out, with the bias dropping from a majority short 63% yesterday to a majority long 55% as of today morning.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

Tech stocks weren't spared the rout yesterday, with the weekend gap in the Nasdaq and the plummet thereafter undoing a significant chunk of gains and forcing its technical overview to shift to a more volatile overview on the daily (and if moves like this persist, the weekly as well). In terms of its components, only a couple were in the green with the rest in the red lead by American Airlines as the travel sector takes in heavy losses. While indices tend to settle slightly after big moves, its now a question of breakout vs. reversal strategies and not necessarily buy vs. sell.

IG client^* and CoT sentiment for Nasdaq

As with the Dow (and DAX), retail bias here has shifted from a majority short 60% to a now slight majority long 51%, the first time we’ve seen majority long bias since August of last year.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Risk-related flows were in focus yesterday, sending the DAX significantly lower and beneath both its 50-day and 100-day moving average. All its components were in the red, with auto shares at the bottom, and airliner Lufthansa at the very bottom. As with both Dow and Nasdaq, the bull trend technical overviews were swiftly undone, and has shifted to a more volatile outlook as the ADX (Average Directional Index) in all three continue to show a propensity to trend. Data is of little relevance at this stage, but there were IFO sentiment figures for Germany that beat expectations, and today we'll get the final GDP (Gross Domestic Product) figure for Germany expected to show no growth.

IG client^* and CoT sentiment for DAX

The weekend gap lower and the price plummet has been a boon for retail traders, whose sell bias that stood at an extreme short 83% at the start of last week now shifting to a majority long 56% as shorts unwind and longs initiate.

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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