Dow & S&P 500 CoT bias shifts to majority short

Dow Technical analysis, overview, strategies, and levels

Contrary to the weeks before, last week's Weekly pivot points held for the Dow in what was a relative calm week, and in turn aiding contrarian reversals over conformist breakout strategies. There were only a few outperformers on Friday that included Pfizer and Boeing, but where a clear majority were in the red with losses heaviest by UnitedHealth and American Express. Only consumer staples as a sector finished in the green, the rest contracting with defensive utilities hurt the most.

IG client^* and CoT sentiment for Dow

But the more noteworthy item here has been a shift in sentiment for larger speculative traders according to the latest CoT (Commitment of Traders) report, from a previous majority long 59% to a now heavy short 70% on an increase in short positions by 5,481 lots and a simultaneous drop in long positions by 672. It has also shifted for the S&P 500 from a slight majority long 51% to a slight majority short 51%.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

On the Weekly, the Nasdaq's price managed to breach last week's 1^st Resistance level and to offer conformist breakout strategies a bit before retracing back down with contrarian reversals the outperforming strategy. On Friday, it ended only slightly in the red. Losses were once again led by the hospitality industry – American Airlines and Marriott both suffering more than 6% price drops – and where the outperformer was Tesla.

IG client^* and CoT sentiment for Nasdaq

Sentiment hasn't shifted amongst institutional traders as it has for both Dow and S&P 500, but majority long bias has dropped to 60% on a reduction in long positions by 620 lots and an increase in shorts by 583 lots. Retail bias while still majority short has dropped from the start of last week's 57% and is close to the middle at the start of this week at 53%, at one point briefly shifting to the middle intraweek.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

It was a very rangebound week for the German DAX, offering little in either direction and briefly crossing above last week's Weekly 1st Resistance level to offer only some points before giving preferability to contrarian reversals. The contrast to its volatile technical overview extended into Friday's session, at the bottom airplane engine maker MTU Aero Engines, and a handful of outperformers with Deutsche Boerse leading the gains. Germany's services PMI (Purchasing Managers Index) showed a worse than expected contraction last week, and in terms of German data we get factory orders this morning expected to show a negative reading.

IG client^* and CoT sentiment for DAX

Lastly, in sentiment, retail bias shifted intraweek to a majority long 58%, but range-trading longs have been swifter to close out trading these narrow ranges and pushing the bias back towards a slight majority short 53%.

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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