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.
Be sure to request IG’s Weekly & Daily Market Report when you open an account with IG Dubai and get access to the full information on the FX majors, commodities, indices, and Bitcoin.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
React to global volatility
Market volatility continues as coronavirus dominates the global agenda. Trade with us to take advantage of:
- Tight spreads – from just 1 point on major indices, and 2.8 on US crude
- Guaranteed stops – they’re free to use, and you’ll only pay a small fee if they’re triggered
- Round-the-clock assistance – our highly-skilled team are on hand to support you
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
