Retail weekly bias shifts in Dow, Nasdaq, and DAX

Dow Technical analysis, overview, strategies, and levels

The Dow enjoyed a strong week that despite Friday's plummet witnessed big gains. In terms of Friday's performance, nearly all its components in the red led by Microsoft, while a couple were in the green including Proctor & Gamble and Travelers. All US sectors suffered contractions on Friday save for defensive utilities increasing slightly, and where energy was hit hardest following a further plummet in oil prices. From a strategic standpoint, conformist breakout strategies were the clear outperformers last week on both the Daily and Weekly, with usual price movement involving a breach of levels.

IG client^* and CoT sentiment for Dow

In sentiment, retail bias has shifted from a heavy long 67% to a heavy short 66% as longs take profit and range-trading shorts initiate, while larger speculative traders according to the latest CoT report have been unwinding long positions by 3,076 lots, pushing majority long bias lower to 59%.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

Although the Nasdaq's didn't outperform compared to the Dow, it too managed to finish the week in the green and undo most of the losses suffered the week before. Friday's finish was negative, and as such most of its components were in the red, with the losses led by Autodesk and American Airlines. Technical overview conformist strategies were the clear outperformers for the week breaching Weekly resistance levels, and while that was the case on the Daily as well, follow through on some days has been less and more testing of short-term momentum-based strategies.

IG client^* and CoT sentiment for Nasdaq

Retail bias has also shifted here from majority long to majority short, while CoT bias has risen to 63% on a larger reduction in short positions than long positions.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

It was the gains made earlier last week that gave the DAX a strong finish, and in turn ensuring that volatile breakout strategies outperformed for the week. But as with the Nasdaq, Daily levels were more difficult to breach as its price movement was less volatile as the week progressed. Here too, on Friday most of its components were in the red, with big percentage contractions for automakers like Daimler and VW (whose CEO said the company was still spending $2.2bn a week), and where airline Lufthansa wasn't that far off from the bottom. The ECB's (European Central Bank) announcement of removing limits on bond-purchasing has pushed bond yields lower, but whether investors will rush to purchase equities as companies face big difficulties remains yet to be seen.

IG client^* and CoT sentiment for DAX

As for retail traders, the bias has shifted in what is usually the product with the heaviest range-trading.

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.

Be sure to request IG’s Weekly & Daily Market Report when you open an account with IG Dubai and get access to the full information on the FX majors, commodities, indices, and Bitcoin.