Dow officially in bear territory, ending its 11-year bull run
Majority long retail bias in Dow, Nasdaq and DAX rises following morning plummet.
Dow Technical analysis, overview, strategies, and levels
It wasn’t just a lower finish yesterday, but a further plummet this morning to officially end its 11-year bull run and put it in bear market territory, despite fiscal stimulus plans out of the US government that have yet to be enacted as the US banned travel from Europe for 30 days. All of the Dow’s components finished in the red yesterday, Boeing plunging 18% on news it plans a full drawdown of a $13.8bn loan initiated last month, and no doubt negatively affected as travel bans rise globally. As for US sector performance, all were in the red with industrials hit hardest, and health care down 4% but least hit when compared to the rest. In US data CPI (Consumer Price Index) figures showed 0.1% growth, and PPI (Producer Price Index) figures will be released today, though unlikely to be of significance in the face of significant risk-related moves.
IG client* and CoT sentiment for Dow
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
The Nasdaq hasn’t been spared the market rout, even if it isn’t in bear market territory (yet). Nearly all its components finished in the red yesterday (this morning's plummet aside), at the bottom including travel site Expedia and hospitality company Marriott, while a few outperformers finishing in the green yesterday including Gilead Sciences (which is working on a coronavirus cure). As the World Health Organization declares the coronavirus outbreak a pandemic, the mood has turned bearish and media focus negative. For the financial markets, volatility has failed to drop and in turn befitting volatility breakout strategies (yesterday’s break of its 1st Support level occurred on more than one occasion each yielding).
IG client* and CoT sentiment for Nasdaq
In sentiment, retail long bias has risen 5% to 56%, still lower than that of the Dow at a larger 63% long bias given the plummet there has been more severe.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
It’s been a volatile session for the German DAX as well, suffering a big percentage loss and taking its price past yesterday’s 1st Support level on more than one occasion. As per yesterday’s finish, most of its components were in the red, adidas at the bottom after it said it expected first-quarter sales to drop by over $1bn in China, and airliner Lufthansa also deep in the red. A few did manage to finish yesterday in the green including some auto shares, but this morning’s plummet has tested the index once again. The ECB (European Central Bank) will be announcing its monetary policy today, and while expectations aren’t for any significant changes with regard to its interest rates, any increase in easing will be important within the overall risk-related context.
IG client* and CoT sentiment for DAX
In sentiment, retail bias has jumped 7% to a heavy long 68%, the largest long bias of any of the main indices.
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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