Dow, Nasdaq and DAX retrace testing bull trend technical overview
Fresh retail shorts swift to take profit in all three, bias shifts in the DAX to majority long.
Dow Technical analysis, overview, strategies, and levels
It was a red day for US equities, the Dow making a move past yesterday's 1st Support before retracing to aid reversals as its bull trend technical overview gets tested. Amongst its components, only Walmart finished in the green, the rest registering losses which were heaviest for energy giant ExxonMobil (big shareholder to vote against its CEO and chairman), and smallest for Cisco ahead of its earnings today. In US data, CPI (Consumer Price Index) figures contracted at a worse than expected pace, mortgage delinquencies rose, the budget deficit widened to a record high, and NFIB's small business index dropped. Talk of more stimulus from both central bank officials and politicians failed to subside, and later today the US Federal Reserve Chair Powell will be speaking.
IG client* and CoT sentiment for the Dow
Retail shorts were quick to take profit on yesterday's move, the bias now near the middle at 53%.Retail shorts were quick to take profit on yesterday's move, the bias now near the middle at 53%.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Both Dow and Nasdaq were hit yesterday, but here its price went beyond yesterday's 1st Support to testing buy fades (and early reversals) before partially retracing this morning. Amongst the Nasdaq's components, only a handful finished up including Netease, at the bottom Ulta Beauty and Micron Technology (whose memory shipments were dropping even prior to Covid-19). Cisco – a component of both Dow and Nasdaq – is expected to release its earnings today.
IG client* and CoT sentiment for Nasdaq
In sentiment, after six consecutive days of gains fresh and averaged-in shorts finally had a chance to take profit, the bias dropping 11% from 72% to 61% on yesterday's price drop alone as shorts unwind.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
The DAX was also in for retreat yesterday, breaking past yesterday's 1st Support level but also reversing this morning to potentially offer buy-on-reversal strategies a play on the key pivot point. For the German DAX's components, Wirecard remained most volatile, suffering the biggest percentage loss after enjoying gains the day before on news that Germany’s financial watchdog was conducting multiple investigations. Amongst the gainers, Deutsche Post was second-best despite its earnings release that showed Q1 net profit drop.
IG client* sentiment for the DAX
Given range-trading is usually heaviest here and the fact that the DAX's gains have been more limiting and hence failing to take retail short bias much higher to begin with, the drop yesterday has caused retail bias to shift from a previous majority short 58% to a now slight majority long 51%.
DAX chart with retail 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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