North-American-trade-deal-and-US-China-trade-report-aids-indices-in-retracing-off-the-lows
Revised US-Mexico-Canada trade deal yet to be ratified, while WSJ report remains unconfirmed.
Dow Technical analysis, overview, strategies, and levels
The Dow was in for a bit of a shock yesterday, plummeting lower before retracing to end the session higher on positive trade news with a US-Mexico-Canada (USMCA) trade deal that is yet to be ratified and a Wall Street Journal (WSJ) report that the December 15th tariff deadline could be postponed. That news has been unconfirmed, but it did prevent the index in finishing lower and aided buy reversal strategies in the process. In terms of sectors only energy and health care were slightly in the green while the rest were slightly in the red, and where in terms of components Apple was near the top and Boeing near the bottom. Thus far it’s been trade headlines that are dominating momentum, but overall stocks have been looking for an excuse to go up, likelier affected by central bank injections in the short-term markets than trade optimism. Until Sunday's December 15th tariff deadline we've got other items to keep us busy, including tonight's US Federal Reserve (Fed) monetary policy announcement, expected to affect risk-related products like equities, especially if talk includes short-term liquidity injections.
IG client and CoT sentiment for Dow
In sentiment, retail bias has plummeted again shorts quick to take profit, dropping from a majority short 67% to 62%.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Any additional tariffs this Sunday on imports from China could hurt some tech companies, and hence positive news on the USMCA deal and optimism regarding a possible delay in Chinese tariffs prevented further downside bias for this pair, with components’ Netflix and Comcast at the bottom in terms of underperformers. In earnings, Costco, Adobe and Broadcom will be reporting today. From a technical standpoint it remains a stalling bull trend, but needing little to shift to a more consolidatory outlook in the short-term (not to be confused with the weekly outlook that is more bullish).
IG client and CoT sentiment for Nasdaq
Retail bias has moved little here, down a notch from yesterday’s heavy short 75% bias.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
The DAX is set to get affected indirectly by the Fed's decision and impact on risk-related products. But it will be more directly affected by tomorrow's ECB (European Central Bank) announcement, and hence will be sandwiched between two central bank decisions that thus far are offering on the surface conflicting monetary policies to address conflicting economic realities on the ground in the US and the Eurozone.
IG client and CoT sentiment for DAX
Going into tonight's event retail bias is unchanged at a majority short 63% having plummeted from extreme short levels on what has been heavy range-trading.
DAX chart with retail and institutional sentiment
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