Dow, Nasdaq and DAX partially recover following trade deal scare
Preliminary PMIs released today out of the US and Eurozone.
Dow Technical analysis, overview, strategies, and levels
The Dow wasn't immune to the trade talk this morning following White House Navarro's comments that suggested the US-China deal was over before clarifying it pertained to trust. The index finished the session higher yesterday to easily fill the weekend gap, and Nike was the outperformer yesterday amongst its components ahead of its earnings release later this week. Health stocks such as Walgreens and Merck who had previously outperformed late last week underperformed, and in the end as sectors it was health and financials that contracted slightly while tech and utilities were in the green and outperforming. In US data, existing home sales plummeted to lows unseen in nearly a decade, and new home sales will be released later today preceded by preliminary manufacturing and services PMIs (Purchasing Managers Index) out of Markit. Ongoing coronavirus attention as well as any US fiscal stimulus talk are other items to be on the lookout for.
IG client* and CoT sentiment for Dow
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
The tech sector outperforming meant that the tech-heavy Nasdaq was in for a fresh record close, and amongst its components Synopsys and PayPal finished on top with the latter planning to start direct crypto sales. In the bottom were health and pharmaceutical stocks that had outperformed on Friday, reversing to finish much lower by the end of the session. Here too, trade talk confusion this morning sent the Nasdaq's price lower before recovering. Overall, far more will be needed to undo its current bull trend technical overview as its price approaches the upper end of its bull trend channel.
IG client* and CoT sentiment for Nasdaq
In sentiment, given the price gains here are larger than that of the Dow and the recovery more swift, shorts initiated at lower price levels haven't been able to close out just yet, with any further price gains enticing longs into unwinding. Retail bias started the week at a heavy short 68%, and has since risen to 71% as of this morning.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
Although its price recovered later on to cross and close above the last of its main moving averages (the 200-day MA), by the close RWE and Continental were amongst the few outperformers, and where once again Wirecard was in the bottom suffering another big percentage loss as the financial services provider's share price experiences significant volatility. We'll be getting German preliminary manufacturing and services PMIs later today out of Markit, with expectations for an improvement on the previous readings but ongoing contraction in both sectors with sub-50 readings.
IG client* and CoT sentiment for DAX
In sentiment, range-trading continues, and the finish higher has taken retail short bias to 59% as its price approaches a very short-term resistance level.
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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