Dow, Nasdaq, and DAX finish the week higher, shorts get squeezed

The latest from Wall Street:

While the index finished higher for the week, it wasn’t by a lot and continues to test its weekly bull trend technical overview that is stalling heavily at the highs, unlike the Nasdaq 100 closing at a record high. Intel outperformed while Boeing was near the bottom as the tech sector posted the highest gains, while real estate and utilities contracted.

Dow Technical analysis, overview, strategies, and levels

Last week’s weekly 1st Resistance level didn’t reach but usually when either major pivot is reached on the weekly outlook it has had a tendency to show more momentum. Its technical overview remains a stalling bull trend with its price above all its main weekly moving averages.

IG client and CoT sentiment for Dow

Extreme long bias in the CoT (Commitment of Traders) report remains just that, while retail sentiment edges higher into heavy short territory as longs get enticed into closing out and shorts hold on.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

A fresh high for last week’s close for this tech index, as the tech sector outperformed to boost the Nasdaq into outperforming. Tesla was at the top following its surprise profit, while Microsoft improved at the expense of Amazon following news the former beat the latter in securing the Pentagon’s $10bn cloud computing contract. But as with the Dow, it’s been difficult breaching the upper 1st Resistance level on the weekly, though it could be different as tech giants’ Apple and Facebook announce their earnings this week, as the index’s bull trend technical overview stands at a crucial mid-term resistance level, and should it hold contrarian strategies can’t be ruled out for retracement back down.

IG client and CoT sentiment for Nasdaq

In sentiment, retail bias is at extreme short levels and awaiting retracement back down, while CoT bias has dropped to a majority long 61%.

Nasdaq chart with retail and institutional sentiment

Dax Technical analysis, overview, strategies, and levels

Optimism surrounding a phase one trade deal between the US and China aided overall investor risk appetite, and in the process took the DAX towards a higher finish, no doubt buoyed by a weaker euro and European Central Bank (ECB) easing due to start this Friday. With the ECB out of the way, earnings and overall risk appetite will matter, especially as more central banks announcements and data is released this week. The buy breakout on the weekly panned out but has offered little as the slow gains in this index have meant that the bull trend technical overviews on both daily and weekly outlooks have continued to stall even as most of the main technical indicators are flashing green.

IG client and CoT sentiment for DAX

In terms of sentiment both Nasdaq and Dow short traders are getting squeezed as longs take profit, with the bias here also in extreme short territories at 80%.

DAX chart with retail and institutional sentiment