Fresh record highs for Dow, Nasdaq and DAX sends retail short bias higher

Dow Technical analysis, overview, strategies, and levels

With the S&P 500 and the Nasdaq making fresh record highs, the question was whether the Dow too could make a move higher to make fresh record highs after failing to offer significant follow through previously. That question was answered yesterday with a fresh record high and close, and where all US sectors were in the green with energy outperforming and followed by tech. As for its components, there were a few in the red that included Merck and Travelers at the bottom. The technical overview remains volatile (and showing ongoing bullish bias with nearly all its main technical indicators flashing green), and where a breakout opportunity yesterday offered limited profit-taking.

IG client^* and CoT sentiment for Dow

As for sentiment, retail traders continue to get tested by fresh record highs with heavy short bias rising 7% to 76% and near extreme short levels.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

With the Nasdaq the relative outperformer as of late and posting fresh record highs, yesterday’s moves offered a fresh record high and close even if it could best the Dow in terms of performance. However, the lack of follow through intraday meant that the buy breakout opportunity failed to pan out as it retraced off of yesterday’s 1st Resistance level instead. That’s not to take away from its current technical overview that remains bullish despite coronavirus figures and its potential effects. In earnings, Cisco’s results were slightly better than expected, but a spending “pause” and revenue dropping meant its price was down in after hours. Nvidia is up next set to report its earnings today.

IG client^* and CoT sentiment for Nasdaq

In terms of sentiment, retail bias here remains squeezed as majority sell bias rises to heavier levels at 71%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

Once again, the DAX was in for a fresh record high, which worked in line with conformist breakout strategies for limited profit-taking as its current conflicting overview where bullish technical bias is rising but volatility strategies have been outperforming given the underlying of the recent risk-related moves. Most of its components were in the green, including car stocks that managed to outperform.

IG client^* and CoT sentiment for DAX

In sentiment, retail bias here is squeezed the most and has taken extreme short bias 5% higher to 83%, though any significant retracement will likely be met with a heavy unwinding of short positions given range-trading in the German index is usually sizeable.

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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