Dow, Nasdaq, and DAX gain for the week following improvement in risk appetite

Dow Technical analysis, overview, strategies, and levels

Fresh record highs for the Dow last week, but where once against its bull trend technical overview (on both the daily and weekly outlook) continues to stall. Given the increased volatility on the US-China trade deal that improved risk appetite for riskier assets like equities meant that a fade wasn’t (and shouldn’t) be in play as it is likelier to get stopped out in the face of fundamental moves. In terms of sectors, on Friday utility and tech outperformed, but plenty in the red including energy which lagged the most followed by materials, and where in terms of components ExxonMobil was at the bottom.

IG client and CoT sentiment for Dow

As for sentiment, retail bias has dropped but remains in heavy short territory at 66%, and hence less prone to a squeeze. That stands almost exactly opposite that of larger speculative traders according to the latest CoT (Commitment of Traders) report, who have dropped their long bias by 9% to a heavy long 67% on a larger increase in short positions than longs.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

More so than the Dow, the Nasdaq was in for fresh record highs as the tech sector outperformed, but where once again intraday and intraweek movement was still relatively sedate, and hence breakout strategies have been tested (as have been reversals holding on for longer periods). Nearly all its main technical indicators continue to flash green, but the tech index will likely remain at the mercy of any fresh trade news and a deal that needs to stick between strategic competitors’ US and China.

IG client and CoT sentiment for Nasdaq

As with the Dow, CoT bias is plummeting and isn’t that far off shifting, with a drop in majority long bias to 55% from the week before’s 59% on a reduction in long positions by 994 lots and a simultaneous increase in shorts positions by 987 lots, suggesting a lack of expectations in the recent gains sticking over the long-term. Retail bias on the other hand is stuck in heavy short territory and rising as the price gains continue to test short traders who have initiated at lower price levels.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Fresh highs on Friday for the DAX that couldn’t stick by the end of the session, but where its weekly bull trend technical overview continues to stall. The gains have also aided its daily outlook which is showing more bullish tendencies even if consolidatory strategies have been more conformist to its recent intraday price movement. Auto shares performed on Friday, but news of the US weighing 100% tariffs on more EU products certainly won’t help sentiment on the European continent, and in turn European indices like the German DAX even if they have been buoyed by UK election results and the US-China trade deal announcement.

IG client and CoT sentiment for DAX

In sentiment, retail bias hasn’t changed from last week’s heavy short 73% bias.

DAX chart with retail and institutional sentiment