CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Dow, Nasdaq, and DAX finish the week lower

US-China trade war at risk of expanding keeping US indices at bay.

DOW: Mid-term resistance level continues to hold as trade worries mount

Although the main technical indicators are bullish thanks to long-term gains, fundamental worries continue to persist, with the news regarding a potential US prevention of Chinese companies listing hurting risk appetite. Should the trade war expand to engulf capital markets and that would hurt capital flows and cause portfolio readjustments, and almost certainly hit risk appetite and entice contrarian sell breakout strategies over a conformist buys. In terms of sentiment, Commitment of Traders (CoT) bias remains at extreme long levels of 88% with DJIA consolidated longs rising by 1,755 lots and shorts rising by a smaller 450 lots. As for retail sentiment, range-trading shorts took profit last week and took the bias 6% lower to a less heavy majority short 67%.

NASDAQ: Technology shares underperform in a week of retracement

US equities were under pressure last week, retracing further off the highs and mid-term resistance levels holding. And tech stocks underperformed which hit the Nasdaq harder, and keeping its technical overview more consolidatory but still showing long-term positive technical bias. But as with the Dow, it remains prone to any trade and risk-related shocks, which would help contrarian breakout strategies over conformist reversal/fading ones, and would mean that a buy off the 1st Resistance level should be avoided as a fade. CoT bias is a worry to note, as majority long bias has dropped 9% to 55% on a reduction in long positioning by 2,350 lots and a simultaneous increase in short positioning by 1,852 lots. Should the current trend persist, and we’ll see a shift to majority short, where retail bias currently stands even after significant short profit-taking last week.

DAX: Outperforming at the end of the week

As the trade war looks set to worsen between the US and China, the question is whether the current recession in manufacturing will expand to other sectors. A US ban on Chinese listings would hurt US indices more so than European, and hence its no surprise the German Dax outperformed late last week even if it finished lower overall. Weakness in both Dow and Nasdaq aided retail traders into taking profit, but here they’re getting squeezed further, with the bias rising 7% for the week to a heavy short 72% as range-trading shorts get stuck and longs take profit. Plenty of German (and Eurozone) data this week, starting with retail, Consumer Price Index (CPI), and employment figures out of Germany today.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

See an opportunity to trade?

Go long or short on more than 17,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.