Dow, Nasdaq, and DAX stall at the highs

Dow Technical analysis, overview, strategies, and levels

While the Dow didn't close at a fresh record for the week, it did manage to post fresh record highs on Thursday before Friday’s risk-off geopolitical event sent its price dropping back down from the highs. The move offered a buy breakout opportunity, but was short-lived and once again testing conformist technical strategies even if its current overview remains a stalling bull trend. In terms of sectors, only real estate and defensive utilities were in the green, with the rest in the red led by materials and energy. Amongst its components, nearly all were in the red. With manufacturing data out of the way – and according to ISM contracting at its worst pace in a decade – services are up next, and while today's Markit estimate will be noted, it's usually ISM's release that's more impacting, and is set for release tomorrow.

IG client and CoT sentiment for the Dow

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

After finishing 2019 with stellar performance results, the start of 2020 thus far has been tested, whereby the Nasdaq finished slightly higher for the week. Amongst its components, American Airlines was near the bottom, while Tesla was the top performer following deliveries that beat Wall Street's expectations with its price spiking into record territories. Its technical overview hasn't changed from a bull trend that is offering little beyond its daily and weekly pivot points, and a brief look at the weekly chart shows it'll take a lot more than a slight retracement to undo that attitude.

IG client and CoT sentiment for Nasdaq

In terms of sentiment, retail bias remains heavy short and more so than that of the Dow given we've experienced larger price gains in this tech index, and as a result more will be needed to unwind those positions in profit.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

After spending the early part of last week in retracement, the DAX got more volatile towards the end with a drop on Friday in line with global ‘risk-off’ moves whereby investors snapped up safe haven and dropped equities, and where airline stocks were at the bottom led by Lufthansa and auto shares also in the red. The daily outlook remains relatively consolidatory given the lack of movement over the past few months with the action mostly rangebound at the upper end. But on the weekly it's still a bull trend technical overview even if it has stalled close to its highs, and a buy on reversal for last week's Weekly 1st Support level panned out, even if contrarian sell breakout strategies can’t be ruled out in the future.

IG client sentiment for the DAX

Range-trading the German index remains heavy amongst retail traders, and while the majority short bias dropped to 60% mid-week, the price drop has taken its bias back towards heavy short levels at 64%.

DAX chart with retail sentiment

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