Dow surges in largest single day rally since 1933

Dow Technical analysis, overview, strategies, and levels

The Dow's price made a move well beyond yesterday's 1^st and 2^nd Resistance levels, with the net result its largest single day rally since 1933. Expectations have been for equities to (at least eventually) rise given ongoing and unlimited easing from the US Federal Reserve, and await any further updates with regards to the $2tn fiscal stimulus package. In terms of its components, Chevron was the top performer followed by American Express and Boeing, and where only Verizon was in the red. US sector performance showed all heavily in the green led by energy, financials and industrials. In earnings, Nike's results beat expectations, saying it was seeing a recovery in China. As for US data, preliminary PMIs (Purchasing Managers Index) for the US out of Markit showed manufacturing and services contract, while Richmond's estimate showed a surprise expansion and new home sales were better than expected. Up next we'll get durables expected to show contraction, with the real attention on tomorrow’s unemployment claims.

IG client^* and CoT sentiment for Dow

In sentiment, majority long bias amongst retail traders has shifted to a majority short 60%

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

As with the Dow, the Nasdaq also enjoyed gains in yesterday’s session, its price breaching yesterday's 1^st and 2^nd Resistance levels and in turn aiding conformist breakout strategies in line with its volatile technical overview. In terms of the Nasdaq's components, American Airlines was the outperformer surging nearly 36%, but there were a few in the red that included the day before’s outperformers such as Netflix and Activision Blizzard.

IG client^* and CoT sentiment for Nasdaq

In sentiment, while it hasn’t shifted to majority short just yet as has been the case in both Dow and DAX, it’s currently in the middle with a small price gain likely to tilt the balance.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Plenty of gains to cheer about here as the German DAX made a move well past yesterday's 1^st and 2^nd Resistance levels, and managed to aid conformist breakout strategies. Auto shares outperformed with Daimle on top, and none of its components were in the red. In all, indices globally finished in the green, but has done little here to shift its current volatile technical overview even if most of its main technical indicators are relatively bearish. In terms of German data, preliminary manufacturing PMI was better than expected but still contracting with a sub-50 reading, while services plunged to 34.5. IFO sentiment figures are up next, though preliminary figures released last week showed a significant drop.

IG client^* and CoT sentiment for DAX

In sentiment, the upside movement has shifted retail bias from a majority long 51% to a majority short 60%.

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.