Fundamentals shift US equities’ technical overviews
Dow and Nasdaq significant green finish undoes bearish technical overview, though trade outlook remains bearish.
DOW: Technicals remain at the mercy of fundamental forces
Once again, it’s been fundamental forces causing a shift in the technicals for equities, as most of its main technical indicators are back in neutral following yesterday’s trade relief announcement that pushed its price to close back above its 100-day moving average. But a trending ADX and any further trade-related announcements could easily cause it to shift again, and as a result contrarian breakout strategies may be the preferred strategy before initiating a conformist reversal. Apple outperformed given it’s a significant beneficiary of the delay in tariffs on smartphones and laptops, while retailer Walmart also did better as the tariff delay will get pushed until after the bulk of the Christmas shopping. Meanwhile, while retail bias is at a majority short 62%, institutional bias has pushed 4% higher to an extreme long 90% on an increase in longs by 1.3K lots and a simultaneous reduction in shorts by 1K lots.
NASDAQ: Back above all its main long-term moving averages as negative technical bias undone by tariff relief
It was a significant finish in the green for US equities yesterday, with the Nasdaq no exception to that, finishing above all its main long-term moving averages following fundamental news regarding the application of US tariffs on the remaining $300bn worth of Chinese goods delayed on some of those goods until mid-December. While it’s a technical overview shift to consolidatory, its fundamentals that are the catalyst, and hence any negative (or positive) news could cause breakouts to occur in either direction, especially with the moves relatively still volatile and an ADX still showing a propensity to trend. As a side note, while Apple has outperformed on the trade news, big tech companies aren’t out of the woods with a recent Bloomberg report stating that the FTC Chief is prepared to break up those companies if necessary.
DAX: Retail bias pushes closer to the middle as range-trading longs take profit
US indices enjoyed a far better recovery yesterday, as European and Asian indices recorded more cautious gains. The DAX is still relatively close to the lows, ZEW figures were a clear disappointment, and preliminary GDP figures are expected to show contraction following what has been contracting manufacturing data out of the Eurozone’s powerhouse. In terms of its long-term moving averages, its only just clear of its 200-day MA, with the bulk of its remaining technical indicators mostly neutral. As for retail bias, it has dropped 7% from yesterday’s majority long 60% on long profit-taking from what has been mostly range-trading.
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