Dow outperforms this time around as tech-heavy Nasdaq drops
Retail sell bias plummets in Nasdaq and DAX on short profit-taking, remain majority short in all three.
Dow Technical analysis, overview, strategies, and levels
Yesterday's intraday gains in the Dow briefly took its price past its 200-day moving average before eventually being undone, and this time around it was the tech-heavy Nasdaq that underperformed. As for component performance, tech stocks' Microsoft, Cisco, and Intel that were in the bottom. Pfizer and UnitedHealth outperformed, the former's (and partner BioNTech) Covid-19 vaccines fast tracked by the FDA. Sector performance was mixed, health and financials finishing higher while tech and communication underperforming. With earnings season starting, JPMorgan Chase will be the Dow component releasing its figures, and non-components Citigroup and Wells Fargo will be noted in the general bank earnings context before other heavyweights like Goldman tomorrow release their earnings.
IG client* and CoT sentiment for Dow
The lack of a plummet here has meant retail bias hasn't dropped like it has in Nasdaq and DAX, rising a notch instead to a majority sell 62%.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Volatile moves in the Nasdaq that remained within its weekly pivot points but have already made a move towards today’s 1st Support level. Most of its components finished lower, the losses heaviest for Analog Devices, which announced it would buy Maxim Integrated Products whose share price surged to outperform amongst the Nasdaq's components. The attention for today will be on financials given the earnings release, and amongst the index’s components we've got Fastenal releasing its figures. Coronavirus cases, US lockdown restrictions, and worsening US-China tensions are other general items to be on the look out for, and on the economic data front we’ve got CPI (Consumer Price Index) figures.
IG client* and CoT sentiment for Nasdaq
In sentiment, the partial retracement back down has given a chance for some fresh and averaged-in shorts into closing out as well as fresh longs enticed into buying in, sending the previous heavy short bias of 73% to 60% as of this morning.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
The DAX wasn't spared the plummet in risk appetite towards the end of the US session, undoing the gains made yesterday with ease and then some. Amongst its components, Wirecard outperformed and gained the most, those finishing lower including Fresenius, Deutsche Bank, and Volkswagen. In terms of German data we've got final CPI figures and ZEW sentiment, with attention no doubt on US earnings for a taste of what companies can expect following a tough second quarter.
IG client* and CoT sentiment for DAX
With range-trading heavy (or at times heaviest) in the DAX, the retracement off the highs has sent retail bias plummeting from a previous heavy short 71% to 59% as of this morning, with any significant price decline likely to entice range-trading shorts into closing out and fresh longs into initiating, and potentially shifting the bias in the process.
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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