DAX retail short bias plummets, Dow and Nasdaq post fresh record highs
Retracement in the DAX aids extreme short retail traders into unwind fresh shorts, Dow majority short bias rises.
Dow Technical analysis, overview, strategies, and levels
Investors have become accustomed to fresh record highs in the Dow, and yesterday it closed higher for a slight green finish. In terms of the Dow's components, Goldman Sachs was at the top, and where the sector that outperformed included consumer discretionary and financials and on the opposite end real estate registering the largest declines. In terms of US data, it was better than expected on nearly all fronts, and there will be a dearth of data until we get manufacturing data tomorrow and GDP (Gross Domestic Product) the day after.
IG client and CoT sentiment for Dow
In sentiment, majority short bias has gotten heavier rising 5% to a heavy short 70% as fresh shorts continue to initiate, lower short positions get averaged-in, and what remains of longs get enticed into taking profit.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
With the Nasdaq outperforming on Monday, Tuesday's performance was more rangebound as once against its bull trend technical overview fails to deliver significant intraday gains. As far as its components go, Netflix outperformed at the top while Expedia was at the bottom.
IG client and CoT sentiment for Nasdaq
A lack of significant upside movement was most beneficial for retail traders, whose bias was extreme short at 77% and desperately in need of retracement back down, with the oscillations pushing the bias 3% lower to a still heavy 74%, and where far more will be needed in order to unwind the bulk of those shorts initiated at lower price levels.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
The DAX was in for a retreat yesterday as once against its bull trend technical overview stalls, offering only one conformist reversal buy before the market trended opposite. There will be a few items out of Germany including PPI (Producer Price Index) and Germany’s IFO business climate, though should the ECB's (European Central Bank) Lagarde have anything to say about further easing in her speech today and it'll likely aid equities more. The same holds true with regards to any US-EU trade news/rumors.
IG client and CoT sentiment for DAX
The biggest winners yesterday were retail traders that were in desperate need of retracement, with yesterday’s extreme short bias dropping 13% to a heavy short 65% as fresh (and averaged-in) shorts unwind.
DAX chart with retail and institutional sentiment
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