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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Dow CoT short bias rises, Nasdaq shifts to the middle

It’s another week of earnings, which will include Netflix, IBM, and Coca-Cola.

Wall Street Source: Bloomberg

Dow Technical analysis, overview, strategies, and levels

The technicals continue to impress in the short-term for the Dow, and in the mid-term its price has moved back above its 100-week moving average with a positive DMI (Directional Movement Index) cross occurring last week. When it comes to fundamentals, US data continued to disappoint, especially on the employment front with another big reading in unemployment claims. That aside, 'reopening' and its respective guidelines may be the theme moving forward. And when it comes to earnings, we've got a string of them this week that will include IBM today, and Coca-Cola tomorrow.

Dow Technical Indicators Source: IG charts

IG client* and CoT sentiment for Dow

In sentiment, larger speculative traders according to the latest CoT (Commitment of Traders) report upped short positions by 1,456 lots to take majority short bias to 62%, with retail traders in heavier short territory at 72%.

Dow sentiment Source: IG charts

Dow chart with retail and institutional sentiment

Dow Source: IG charts

Nasdaq Technical analysis, overview, strategies, and levels

It was a week of outperformance for the Nasdaq, its price breaching both of last week's Weekly resistance levels aiding conformist breakout strategies. In terms of performance, Gilead Sciences was on top late last week after unconfirmed reports emerged that its drug showed success, only for the company to state that more needs to be analyzed before drawing any conclusions from the trial. It'll be a big week in earnings, and Netflix whose share price rose to fresh record highs last week will be releasing its figures tomorrow, alongside plenty of other companies.

NASDAQ Technical Indicators Source: IG charts

IG client* and CoT sentiment for Nasdaq

In sentiment, retail short bias has risen since the start of last week with the bulk of those shorts getting squeezed on the upside movement, while the bias has shifted for institutional traders to the middle on a reduction in longs by 1,057 lots and shorts rising by 1,697 lots.

Nasdaq sentiment Source: IG charts

Nasdaq chart with retail and institutional sentiment

Nasdaq Source: IG charts

DAX Technical analysis, overview, strategies, and levels

The price movement in the DAX wasn't as impressive as that of the Dow or Nasdaq, failing to aid conformist breakout strategies on the Weekly but more than paying off on the daily overview which is a stalling bull trend, as its price lifted itself off the intraweek lows for a finish not far off from its start. In terms of its components, Infineon outperformed late last week with carmaker Volkswagen a close second, withdrawing its outlook for 2020 due to uncertainty over the coronavirus which lead to a 81% drop in Q1 profits. European stocks in general will be in focus this week as plenty will be reporting their earnings.

DAX Technical Indicators Source: IG charts

IG client* and CoT sentiment for DAX

In sentiment, retail bias is back in heavy short territory following the price increase last Thursday and Friday, with range-trading shorts reinitiating in hopes that market movement will remain rangebound.

DAX sentiment Source: IG charts

DAX chart with retail and institutional sentiment

DAX Source: IG charts

*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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This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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