CoT traders majority short Dow, up majority buy Nasdaq bias
Rising coronavirus cases and fears of restrictions dent appetite, with Facebook’s plunge hurting the tech-heavy index.
Dow Technical analysis, overview, strategies, and levels
Despite a positive start last week with better than expected economic data, its price failed to finish above its 100 and 50-week moving averages, and testing daily pivot points in weekend trading. On Friday, all its components finished lower save for wholesaler Costco, the losses heaviest for financials' Goldman, JPMorgan and American Express, with NIKE in the mix following its earnings release that showed total sales down 38% despite a big increase in online sales. All US sectors finished lower with the contraction largest for communication and financials, and where defensive utilities and much-needed health contracted the least.
IG client* and CoT sentiment for Dow
In sentiment, we've had a shift from majority short at the start of last week to a majority long 56% as shorts unwind and longs initiate, while on the CoT (Commitment of Traders) front they haven't budged from their heavy short 76% with similar 400+ lot increases in both long and short positioning.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
It wasn't as tough a week for the Nasdaq making a fresh intraweek high before closing lower for the session, and once again testing buy strategies on a lack of upside momentum as its bull trend technical overview starts to stall at the highs, and price starts to reach the lower end of its daily bull trend channel. Amongst its components, Facebook took the largest loss on Friday after more companies halted US advertising on its social media platform. The rise in coronavirus cases making travel site Expedia second from the bottom in terms of suffering contraction, with Alphabet (Google) and Netflix not that far off in terms of percentage losses. In earnings, Micron will be releasing its figures, the computer hardware producer recently improving its outlook.
IG client* and CoT sentiment for Nasdaq
As for sentiment, the lack of a big retracement has kept retail bias in majority short territory, while CoT speculator bias has jumped to a heavy long 68% on a 2,528 lot reduction in shorts.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
The weekly losses for the German DAX were minimal, and while a buy breakout opportunity was on offer on the gains late last week, it eventually finished the session lower to give contrarian sells the outperforming strategy. Overall, its price is near its main long-term weekly moving averages (and its 200-day MA) and in turn offering plenty of false signals, with its weekly bull trend line barely holding as its price stalls near the 12,000 level. Only a handful of its components were up by the close including real estate company Vonovia and Beiersdorf, the rest finishing lower with the losses excruciating for Wirecard after it filed for insolvency. The financial services provider aside, Deutsche Bank and auto companies' BMW and Daimler were the bottom three underperforming for the session.
IG client* and CoT sentiment for DAX
In sentiment, after briefly shifting to the middle, retail traders are starting the week with a slight 51% majority short bias, and needing little to shift to majority long.
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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