Fresh highs for indices, CoT bias remains mixed

Dow Technical analysis, overview, strategies, and levels

Oscillatory movement near the highs have meant there's been little strategic play off of its previous key levels, just shy of its 1st Support level last Thursday. And given that its price has stayed near the highs, the technicals (more so on the Weekly than Daily) continue to flash green and combined with a trending ADX, but where traders remain wary of a sudden volatile pullback similar to what was witnessed earlier this month. Financials relatively outperformed on Friday by the close with JPMorganJPMorgan and Goldman relative outperformers, Intel on top, while Disney led the losses amongst the dozen components finishing in the red. US data was a miss for both unemployment claims and preliminary consumer sentiment out of UoM, mortgage delinquencies dropping but still above pre-pandemic levels.

IG client^* and CoT^** sentiment for Dow

In sentiment, CoT speculators increased longs by 824 lots with shorts dropping 118 lots, the slight sell bias moving closer to the middle at 53%.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

As with the Dow, although it was a finish higher for the Nasdaq that has kept its key technical indicators mostly flashing green on both the Weekly and Daily, there was less to cheer about from a strategic standpoint on a lack of a move towards its key levels on both time frames. Component performance showed Illumina (Q4 earnings beat, improved Q1 outlook) , PayPal, and Applied Materials on top, while Ross Stores and Nvidia (unconfirmed reports on Qualcomm and other tech giant objection to its Arm acquisition) relatively underperformed.

IG client^* and CoT^** sentiment for Nasdaq

As for sentiment, there's also been movement towards the middle for CoT speculators with both long and short positioning dropping, still opting to hold a majority long bias. Retail traders start off the week in heavy sell territory shorting recent price gains, with more longs tempting into closing out (not the case for shares, as they hold extreme long bias in most of the major tech stocks with above 90% buy bias).

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

There's been a general lack of volatility when it comes to indices, the DAX no exception staying within its previous Weekly levels and failing to offer a play, the Daily also experiencing less volatility on most days and in turn resulting in a narrowing of levels should oscillatory movement persist. But given its price is near the highs it's also kept its key technical indicators flashing green. Fresenius, Deutsche Bank, and Siemens were the components relatively outperforming on Friday, losses heaviest for VW and Continental. There was little German data to go on, WPI (Wholesale Price Index) on Thursday showing an increase that was stronger than expected. Tomorrow's focus will be on ZEW economic sentiment figures.

IG client^*sentiment for DAX

The pullback off the highs intraweek resulted in fresh short unwinding, retail sell bias out of extreme short territory and starting this week at 72%. CoT bias for US indices are slight sell Dow, S&P, and Russell, while majority long Nasdaq.

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 for the outer circle. Inner circle is from the previous trading day.
** CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.

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