Dow suffers worst day since 2008

Dow Technical analysis, overview, strategies, and levels

Following the weekend gap lower that shook long traders and a sea of red that induced uncertainty into the markets with the Dow suffering its worst day since 2008, the recovery this morning has done little to shift its current technical overview. Amongst its components yesterday, all were in the red with Chevron at the bottom, with ExxonMobil and Boeing not that far off suffering heavily, with the drop in global aviation testing the airplane maker's share price. US sector performance showed all in the red, worst hit energy down 20% and financials second-worst hit with a near 11% drop. Least hurt were consumer staples and health care but still down more than 4%. The US administration is set to announce economic measures today, though that may not extend to all sectors.

IG client^* and CoT sentiment for Dow

In sentiment, retail bias has risen to a majority long 60%, still below the bias held by CoT (Commitment of Traders) speculators.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

As with the Dow, the Nasdaq was also in for a significant red session, though amongst its components there were a couple in the green including Dollar Tree and O Reilly Automotive. The rest were in the red with the biggest losses suffered by Tesla and Western Digital. Tempting as it may be to label the technical overview bearish given most of its main technical indicators are red and combined with a trending ADX (Average Directional Index), the increased volatility and uncertainty as well as expectations of fiscal and monetary easing has meant that conformist breakout opportunities for limited profit-taking as well as reversals only after significant breaches of key pivot points have been the outperformers, with fading strategies avoided due to likelihood of stop-outs.

IG client^* and CoT sentiment for Nasdaq

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

A gap lower and a finish lower for the German DAX, even if the losses suffered intraday yesterday are on the verge of being undone this morning. All its components ended in the red with Deutsche Bank taking the biggest losses as the financial sector got hurt globally, but auto shares suffering big losses as well. In data – and it means less in the current coronavirus context – German data was mixed, with industrial production showing a surprise increase but its trade surplus dropping. In earnings, Deutsche Post will be releasing its figures, though is of less relevance with focus on how the economy is reacting to current uncertainties.

IG client^* and CoT sentiment for DAX

Lastly, in sentiment, retail bias is still heavy long but down a couple notches at 69%.

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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