Weekly Market Report: Dow, Nasdaq & DAX
Earnings season for tech titans set to keep Nasdaq volatile.
DOW: A week of slight retracement following record highs the week before
The Dow retraced slightly off the record highs posted the week before, with earnings season thus far beating expectations. Tech firms will be in focus this week and hence the Nasdaq will likely be more effected. Yields remain at the lows (and negative in some parts of the world), and hence far more risk is being taken in the equities market in the hunt for returns, and with investors on edge and non-committing if current price gains can’t be maintained. In terms of bias, retail sentiment remains at extreme short territories, while institutional bias is a near opposite extreme long 84%, rising 2% thanks to an increase in longs by 6.7K lots as opposed to a 533 lot increase in shorts.
NASDAQ: A big week for the tech sector as the big companies release earnings
It’s a big week for this tech index, as Microsoft, Amazon, Alphabet (Google), and Facebook will all be reporting their earnings. That should keep this index more volatile than other indices whose share of tech stocks are relatively limiting, even if non-tech companies will also be reporting. The technical overview is a bull trend, but there’s no denying it’s been stalling heavily at the highs, even if it posted a fresh record two weeks ago. Retail bias is heavy short but the retracement over the course of last week has aided fresh shorts initiated at the highs into closing out, and with more needed for the remaining 69% majority short to realize profit. As for institutional bias, it has risen 2% to a majority long 60% on an increase in longs by 2.4K lots and with shorts rising by less than 1K lots.
DAX: Bull trend channel on the weekly still holding as retail sentiment remains in the middle
On the weekly chart, the German index’s bull trend channel is still holding, while on the daily chart it has broken and is no longer classified as a bull trend technical overview, even if its price is above all its main long-term moving averages. German (and Eurozone) data has been a disappointment, trade risks haven’t subsided, and yet investors continue to bank on significant upcoming ECB easing, with overpriced equities far more attractive than negative yielding government bonds. This week’s preliminary PMI figures on Wednesday highlighting German manufacturing and services will be important, but it’s Thursday’s ECB announcement regarding any potential future easing that’ll take center stage in determining risk appetite for equities. Retail bias was in the middle at the start of last week, and remains in the middle at the start of this week as well.
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