Dow, Nasdaq, and DAX plummet this morning
Trader bias remains majority long in all three.
Dow Technical analysis, overview, strategies, and levels
The Dow hit limit down yesterday prior to the open, and here too conformist breakout strategies to the downside were clear outperformers in line with the current volatile financial market technical overview. In US data, housing starts impressed while building permits disappointed, though overall market focus remained on fiscal and monetary policy even if both it and monetary policy can do little to stimulate demand or fix supply chain shocks, with attention more on whether it'll help companies facing serious liquidity issues due to the coronavirus storm. The latest news on that front was the US Fed announcing plans to aid prime money market mutual funds. As for Dow components’ finish yesterday, Caterpillar, pharmacy Walgreens and wholesaler Costco were outperformers, but plenty in the red including energy giant Chevron and airplane maker Boeing.
IG client* and CoT sentiment for Dow
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
As with the Dow, the Nasdaq also hit limit down, with its price reaching yesterday’s 2nd Support level before retracing back up to finish in the green. Amongst its components, Alexion Pharmaceutical, Costco and Netflix outperformed, while American Airlines was down 25% by the end of the day. The current sell everything atmosphere has pushed equities lower as of this morning undoing yesterday’s gains for the tech index, and although conformist breakout strategies have been outperforming, should equities finally find a range and contrarian reversals could come back into play.
IG client* and CoT sentiment for Nasdaq
In sentiment, retail bias has moved slightly higher to a majority long 59%, now higher than that of larger speculative traders according to last Friday’s CoT (Commitment of Traders) report.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
The German DAX broke through yesterday's 1st Support level multiple times, before crashing through its 2nd Support level as well this morning, with the ECB’s (European Central Bank) €750bn bond-purchasing program failing to aid neither equities nor bonds. Fundamental facts in the present are of greater importance, and points to further factory shutdowns, lockdowns, and a worsening economic atmosphere that isn't just worrisome for the German domestic economy, but also for economies its export-oriented economy relies on for demand for its products. In terms of its components, nearly all were in the red with auto shares near the bottom including VW.
IG client* and CoT sentiment for DAX
Range-trading is usually heaviest here, and in retail sentiment yesterday’s 58% majority long bias has risen 13% to 71%.
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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