Dow, Nasdaq, and DAX plummet again

Dow Technical analysis, overview, strategies, and levels

There's usually some relief after a big plummet the likes of which were witnessed on Monday, but Tuesday failed to offer any relief, and once again the massive drop was in line with its current volatile technical overview with conformist breakout outperforming against contrarian reversals. All its components were in the red with Home Depot a relative outperformer following its earnings that topped estimates, while Disney suffered further after the announcement that its CEO will step down. US sector performance showed energy and materials hit hardest, while defensive utilities and consumer staples least hit but still down more than 2%. In data, US House Price Index (HPI) registered another small increase ahead of more housing data both today and tomorrow (there will also be Lowe's earnings release today).

IG client^* and CoT sentiment for Dow

On the sentiment front, retail shorts continue to exit with long bias rising 7% to a majority long 62%, having shifted for the first time to majority long yesterday after months of majority short bias.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

The tech sector yesterday was in for another big hit, and in turn the Nasdaq was in for another volatile red session, with the primary source of the recent moves focused on risk-related flows that have witnessed an exit from equities. In terms of its components, almost all were in the red with the bottom including (once again) American Airlines with a 9% drop, and hotel Marriott second-worst as the hospitality sector suffers big. The technical overview remains volatile following Monday's plummet, even if the market may consolidate thereafter, and in turn splitting trading strategies along the lines of breakout vs. reversals, with fading strategies not ideal given increased volatility usually results in broken pivot points that can more easily cause stop losses to get triggered.

IG client^* and CoT sentiment for Nasdaq

Retail bias shifted yesterday to a slight majority long 51%, and since then has increased to 54% as shorts continue to get enticed into closing out.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Indices globally have been mostly moving in relative tandem, with the theme risk-off or risk-on depending on the latest developments. That has meant the German DAX was also in for a significant drop following Monday's plummet, in turn taking its price past its mid-term support level. In terms of its components, only Infineon was in the green with the rest in the red (though this time around auto shares weren’t the ones lagging the most).

IG client^* and CoT sentiment for DAX

Retail bias shifted to majority long after being in heavy short territory prior to the plummet, and as of today morning that long bias has surged 8% to a heavy long 64%.

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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