CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Equities in retreat this morning as China virus fears grow

Majority short retail bias in Dow and DAX drops while Nasdaq short bias rises following a fresh record high in the tech index.

Dow Technical analysis, overview, strategies, and levels

Although yesterday morning witnessed a slight recovery off of the lows, fears of the virus have shake Asian indices this morning and sent futures lower. Yesterday’s performance showed tech stocks’ intel and IBM at the top, the former set to announce its results today and the latter’s results beating expectations. That put tech stocks as a sector on top, and where the energy sector suffered as travel stocks globally take a hit. No surprise then, that Boeing was near the bottom with Johnson & Johnson not that far off following its earnings release. From a technical standpoint – and it’ll mean less with the global focus now on risk appetite and the China virus – its bull trend on the daily has been stalling near the highs.

IG client and CoT sentiment for Dow

The three consecutive days of losses have been a slight boon for retail traders holding a heavy short bias, and some have begun to unwind with the bias dropping 3% to a heavy short 71%, standing in exact contrast to CoT (Commitment of Traders) report bias at a heavy long 71%.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

A string of earnings releases for the Nasdaq today that involve intel, American Airlines, and Comcast. And while airline stocks are more concerned with the recent virus and dented travel plans, tech stocks will focus on intel's results following IBM's better than expected results on Tuesday. And Comcast will be in focus in light of the recent streaming wars and its plans to launch its own free and paid streaming service this year. Technicals are expected to be a smaller factor in determining this tech index's movement in the fact of potentially changing risk appetite and earnings releases, though as it stands it remains a bull trend technical overview stalling in the sense of not offering significant buy breakout opportunities intraday following yesterday’s intraday record high.

IG client and CoT sentiment for Nasdaq

Given the lack of retracement here compared to the Dow, retail bias hasn’t dropped but instead risen to a heavy short 73%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

While it’s tempting to view the short-term technical overview as bullish (as is the case with its weekly overview) especially following a fresh intraday record high for the DAX yesterday, thus far the lack of follow through intraday has been limiting. Daimler was at the bottom in terms of its components following its third profit warning for 2019, and other car companies’ share prices were also suffering in the red. There is a significant item on the economic calendar however, and that's the ECB (European Central Bank) whose ongoing monetary easing will be crucial in determining appetite for riskier assets in the face of negative-yielding German government bonds such as its 10-year bund.

IG client and CoT sentiment for DAX

In terms of sentiment, the retracement back down has aided retail traders trying to unwind averaged-in shorts, with the bias dropping 9% between yesterday’s extreme short 80% to today’s heavy short 71%.

DAX chart with retail and institutional sentiment

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.

See an opportunity to trade?

Go long or short on more than 17,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.