Fresh record high for the Nasdaq, Dow revamp
Tech-heavy index scores another fresh high, Dow starts off the week with a new divisor and a change in three of its components.
Dow Technical analysis, overview, strategies, and levels
A strong finish for the index breaching last week's 1st Resistance levels on both the Weekly and Daily though not without a struggle. All US sectors finished in the green on Friday, and among the Dow's components it was Coca-Cola on top (restructuring its organization), with Walmart and ExxonMobil (now removed as a component) significant outperformers. The handful suffering in the red included Walgreens again, with Goldman Sachs, Travelers, and Home Depot suffering smaller losses. US data late last week showed unemployment claims remain above a million, personal spending and income rise and beat expectations, its trade deficit worsen, and UoM's consumer sentiment improve.
Starting this week, ExxonMobil, Pfizer, and Raytheon have been removed as components of the Dow, and in their place Salesforce, Amgen, and Honeywell respectively. This was due to Apple’s four for one stock split that reduced its price accordingly, and with the Dow a price-weighted index (unlike the Nasdaq and S&P) that meant that its tech weighting had dropped, forcing it to shift components.
IG client* and CoT** sentiment for Dow
With the gains in price, retail traders are holding a heavy sell bias at 73%, far higher than that of CoT that on a 3,061 lot drop in Dow longs outdoing a smaller 219 lot drop in shorts, has taken short bias to 57%.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
As strong a week it may have been for the Dow, it was a stronger one for the tech-heavy Nasdaq, breaching last week's Weekly 1st Resistance level to aid conformist breakout strategies before stalling near the highs towards the end of it, opting to stay within Thursday's key levels. The outperformer amongst its component was Workday on Friday with double-digit percentage gains in its share price after a strong earnings report and outlook with a majority of analysts hiking price targets. Ulta Beauty was amongst the significant outperformers after its Q2 sales beat, with online sales tripling. But not all finished higher, with eBay, Dollar Tree, and Regeneron suffering in the bottom.
IG client* and CoT** sentiment for Nasdaq
Retail bias is also heavy to the sell side here but begins the week at 69% as opposed to last week's 75% start. CoT speculators remain majority long Nasdaq and Russell, while majority short Dow and S&P 500.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
While the DAX finished higher for the week, the gains were relatively limiting and offering little beyond last week's Weekly 1st Resistance level, and breaking beneath its Daily 1st and 2nd Support levels offering partial retracement on Friday. The outperformers were outnumbered by the end of Friday for the German index, Munich Re, Vonovia and Allianz amongst the few. Those suffering losses included Deutsche post in the bottom undoing gains made earlier in the week, Fresenius, and Bayer. GfK's consumer climate figure worsened further into negative territory on Friday and import prices continued to climb. As for today's data, preliminary CPI figures will be released throughout the day.
IG client* and CoT** sentiment for DAX
The retracement off of the highs late last week has given a chance for some range-trading shorts to close out, the bias starting last week at a majority short 55%, rising to 68% mid-week, before dropping to 62% at the start of this week.
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 for the outer circle. Inner circle is from the previous trading day.
** CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.
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