Nasdaq suffers pullback, still within Weekly bull channel

Dow Technical analysis, overview, strategies, and levels

The plummet late last week sent the Dow's price well below Weekly and Daily Support levels to aid contrarian sell strategies over conformist buys, and shifting its bullish technical overview into stalling once more in what has been a common theme for this index. On Friday, it was recently added Salesforce that underperformed as a component, with Visa and Home Depot also suffering. The dozen or so finishing in the green included financial stocks like JPMorgan, Goldman, and American Express. The focus in terms of data was on US Non-Farm Payrolls, though generally better than expected results meant that the urgency for fiscal policy has dropped, leaving monetary policy and expectations of low rates for 'years' the item to aid risk appetite in the financial markets. A bank holiday today means there's little to expect.

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

In sentiment, retail sell bias has dropped considerably, close to the 58% short bias held by CoT speculators.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

Whatever record highs the Nasdaq enjoyed last week (which initially aided conformist buys on the Weekly) were undone swiftly on Thursday and Friday with big downside moves that aided contrarian sell breakout strategies on both the Daily and Weekly. The losses amongst its components on Friday in terms of share price were heaviest for PayPal, semiconductor systems provider KLA (news the US is considering adding Chinese top chipmaker SMIC to a trade blacklist), and Liberty Global. High hopes that Tesla would be included into the S&P meant its exclusion resulted in a plummet in its share price in after-hours. Outperformers included Broadcom, Marriott (layoffs at Bethesda headquarters) and Alexion Pharmaceuticals.

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

CoT speculators while still majority long reduced their bias to just 53% on an increase in shorts by 2,454 lots, while on the retail front the bias has shifted from a previous heavy short 69% to a majority long 57%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

The Dax's movement were roughly within last week's Weekly levels with its key Support and Resistance levels holding, but late last week the volatility broke beneath Daily levels with ease, aiding contrarian strategies over conformist buys as its bull trend technical overview stalls heavily (once again). There were only a handful of components finishing in the green on Friday, with Deutsche Bank, Covestro and Continental the outperformers. The losses were heavy for plenty, chief amongst them Vonovia, Deutsche Wohnen, and RWE. German factory orders on Friday were below expectations with its previous revised higher, and Thursday's services PMI out of Markit beat estimates showing a healthier above-50 expansionary reading. We'll get industrial production shortly.

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

As for sentiment, retail sell bias was near extreme territories late last week at 77% on Thursday prior to the drop, and starts this week off at a much more moderate 56%. We don't get CoT figures for the FTSE, but based on US indices they're majority long Russell and Nasdaq, majority short Dow, and have shifted to the middle in the S&P.

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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