Worst day for stocks since 1987

Dow Technical analysis, overview, strategies, and levels

Despite efforts by the US Federal Reserve (Fed) to aid the current liquidity crisis and 'sell everything' mentality by reducing rates Sunday night and introducing quantitative easing, the Dow was in for a rude awakening and finished heavily in the red with futures hitting limit down prior to the opening. In terms of its components Boeing was hardest hit with a near 24% plummet conforming it’s in talks with White House officials about short-term assistance, and Travelers not that far off down 21%. Cisco outperformed as customers queue to stock up on goods anticipating the coronavirus storm to worsen with Caterpillar also finishing in the green, but the rest were in the red. In US sector performance, all were flashing red with real estate declining the most and healthcare and consumer staples the least.

IG client^* and CoT sentiment for Dow

As for sentiment, retail bias has shifted again, from yesterday’s majority short 57% to a now heavy long 64%.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

As with the Dow, the Nasdaq also suffered a big red session, with most of its components heavily in the red. That sent its price breaking below yesterday’s Weekly 1^st Support levels and aiding conformist volatile strategies in the process. Retail sentiment shifted to a majority short 54% as of yesterday morning, and since then has shifted again, now back in majority long territories at 64% and identical to that of the Dow.

IG client^* and CoT sentiment for Nasdaq

Both retail and institutional traders in both Dow and Nasdaq are now holding majority long bias.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

The German DAX (and other global indices) weren't spared Monday's market rout, with nearly all its components in the red, and where auto shares were near the bottom ahead of earnings for some of them this week. Its price broke through its Weekly 1^st Support level, and in turn has meant that here too, conformist breakout strategies have been the outperformers.

IG client^* and CoT sentiment for DAX

In sentiment, retail bias was 55% long yesterday, and since then has risen to a heavier 66% as shorts continue to get enticed into closing out and fresh (and range-trading) longs initiate anticipating a move back up.

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.

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