Dow outperforms again, Nasdaq and DAX rise
Retail bias in Dow and DAX rise into heavy short territory following sizeable price gains.
Dow Technical analysis, overview, strategies, and levels
The Dow was an outperformer yesterday, its price surging higher to cross the its 200-day moving average. It also resulted in conformist buy strategies outperforming with a move beyond yesterday's 1st and 2nd Resistance levels. All of the Dow's components finished in the green, outperformers including Caterpillar and Travelers, with the energy and materials sector posting the biggest percentage gains. In financial earnings, banks prepped for a wave of loan defaults with yesterday's three setting aside $28bn:
- JPMorgan Chase beating estimates on a surge in trading revenue, while non-components'
- Citigroup posting a plunge in quarterly profit and
- Wells Fargo suffering a wider than expected loss.
Components' Goldman Sachs and UnitedHealth will be releasing their figures today. In the background, ‘accommodation’ comments from the US Federal Reserve’s (Fed) Brainard and Moderna’s coronavirus vaccine results have been positive risk-on factors offsetting rising US-China tensions.
IG client* and CoT sentiment for Dow
In sentiment, retail bias has jumped into heavy short territory from yesterday's 62% to 71%, running opposite the current technical overview.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Despite the earlier retracement in the tech-heavy Nasdaq, it managed to recover and aid buy-on-reversal (waiting for the level to get breached and initiating after it comes back towards the level) strategies over fading strategies that would have been prone to getting stopped out. It was the Dow that outperformed again for a third consecutive session as tech stocks took a breather. Amongst its components, Align Technology was on top surging with double-digit gains (strike call option expiring Friday) and Regeneron, but there were plenty finishing in the red including Ross Stores and Intuit. In earnings, component Fastenal beat Q2 earnings and revenue estimates, and while the focus is primarily on banks' earnings this week, component Netflix will be releasing its figures tomorrow.
IG client* and CoT sentiment for Nasdaq
In sentiment, the intraday plummet was a boon for retail shorts, but far more will be needed for the bulk of those shorts to be able to unwind in profit.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
A strong session for the DAX that sent its price above yesterday's 1st Resistance level to aid conformist breakout strategies on what was finally additional intraday follow through, with the big move happening after the close. Prior to it Infineon and adidas were relative underperformers, and where Heidelberg and Allianz outperformed. The Asian session is mixed with Chinese shares lower as US-China tensions rise following the US removal of Hong Kong's preferential trading status and expectations of a Chinese response. Nearly all of the DAX’s main technical indicators are flashing green following what has been a bull trend technical overview that has been stalling heavily at these levels.
IG client* and CoT sentiment for DAX
That has enticed retail traders into heavily range-trading the German index, and yesterday's near 2% gains causing retail sell bias to jump from 59% to a heavy 73% as of this morning.
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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