Fundamental moves forces technical overview shifts in equities and some FX pairs, retail shorts take profit in Dow and Nasdaq
Technical overview shift for Dow and Nasdaq as easing expectations get dented.
DOW: Technical overview shift on fundamental Fed tone
The Fed’s tone and two dissenting votes following a 0.25% rate cut were enough to cause market probabilities of future rate cuts out of the US central bank to drop significantly, and taking equities gains that were made on the back of monetary easing back down for the session. All the main US indices ended significantly in the red, and enough to shift this index’s technical overview back to a more consolidatory outlook but still showing positive bias as its DMI remains positive, its price still above all its main long-term moving averages, and a trending ADX that could cause pivot points to get breached more easily. In terms of earnings, GE’s results were better than expected albeit low to begin with, with an improved outlook in its power business where it usually struggles now showing ‘signs of stabilization’. On the trade front, US-China talks ended relatively quietly, with the next meeting slated for September.
NASDAQ: Fundamental move and weeks of oscillation force a technical overview shift
Although the technicals here look slightly more bullish than that of the DOW and with a positive DMI and its price above all its main long-term moving averages, a technical overview shift following weeks of oscillations and ending with a move lower on the Fed’s future rate cut likelihoods is more befitting. Digging a little deeper, AMD’s 10% decline lagged the most, while Apple managed to outperform with a strong 2%+ finish despite the sea of red in equities. Retail traders were significant beneficiaries of the recent move, with heavy short bias of 72% dropping to 66% on short profit-taking.
DAX: Falling global demand keeps the DAX at the lows ahead of more earnings
Easing expectations have been falling, more so for the US than for Europe even if the ECB didn’t act at its most recent meeting. European indices have been mostly underperforming, with final manufacturing PMI figures set to be released today to show ongoing contraction and test European export-oriented industries, with carmakers in focus on the tough Asian market and earnings from BMW (and GM for the US). Negative technical bias persists but is running up against long-term bullish bias on the weekly (see the Weekly Market Report for further details). As for retail traders, long bias dropped 14% as range-trading (and averaged-in longs) took profit on the brief rise. Meanwhile, the German 10-year yield continues to drop further into negative territories, now at a record -0.439%.
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