Dow, Nasdaq and DAX gap lower as trade war fears resurface

Dow Technical analysis, overview, strategies, and levels

Whatever gains the Dow enjoyed early last week were undone by the end of it, and as such its breach of last week's Weekly 1^st Resistance aided both conformist and contrarian reversals, with the daily buy-on-reversal failing following the price drop on Thursday (and Friday). All of the Dow's components were in the red on Friday with the exception of Walmart, and where the losses were biggest for Boeing, ExxonMobil after its earnings release, and Dow. And while we've got big US data this week including non-farm Friday, factory orders will have to suffice for today.

IG client^* and CoT sentiment for Dow

Retail sentiment is still majority short but dropped from heavy short levels as fresher, range-trading (and averaged-in) shorts unwind, but CoT (Commitment of Traders) speculators have raised their short bias to 67% on an increase in shorts by 726 lots and a drop in longs by 141.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

As with the Dow, the Nasdaq's price managed to go beyond last week's Weekly 1^st Resistance before retracing back down at the end of the week, also hurting conformist buy-on-reversals on the daily pivot points. Only a handful finished Friday in the green including Liberty Global after a report emerged it was planning to merge UK operations with Telefonica. The vast majority however, were in the red with big losses for Amazon following its earnings late last week, Tesla after its CEO tweeted he felt its share price was 'too high', and Western Digital which not only missed earnings expectations but also issued a lower-than-expected guidance. Airline stocks could also be in further trouble following Buffet's comments that Berkshire Hathaway had sold all its airline stocks.

IG client^* and CoT sentiment for Nasdaq

The retracement has aided retail shorts in closing out, while CoT speculators have raised their majority long bias to 55%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Only a handful of the German DAX's components finished Thursday up including real estate company Vonovia, and where amongst those in the very bottom included Deutsche Bank, VW, and airliner Lufthansa. Conformist breakout opportunities outperformed on the weekly with a move past both its key resistance pivot points, but as with Dow and Nasdaq testing daily bull trend conformist strategies as equities plummeted towards the end of the week.

IG client^* and CoT sentiment for DAX

In sentiment, range-trading is usually heaviest here, and the declines late last week have enticed shorts into close out, shifting the bias from what was a heavy short 70% at the start of Thursday (it was short 59% at the start of last week) to a now slight majority long 51% at the start of this week.

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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