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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.

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.

Nasdaq Source: Bloomberg

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.

Dow Technical Indicators Source: IG charts

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 sentiment Source: IG charts

Dow chart with retail and institutional sentiment

Dow Source: IG charts

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.

NASDAQ Technical Indicators Source: IG charts

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 sentiment Source: IG charts

Nasdaq chart with retail and institutional sentiment

Nasdaq Source: IG charts

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.

DAX Technical Indicators Source: IG charts

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 sentiment Source: IG charts

DAX chart with retail and institutional sentiment

DAX Source: IG charts

*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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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.

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