Fresh record highs for Nasdaq and Dax

DAX retail short bias inches higher into extreme short territory, remains heavy short in Dow and Nasdaq.

Dow Technical analysis, overview, strategies, and levels

Fresh highs for the Dow earlier in the session that managed to stick but only by a small margin, and in turn keeping its technical overview bullish whereby most of its main technical indicators are flashing green and combined with a trending ADX (Average Directional Index). However, volatile breakout strategies are in play so long as any significant and sizeable risk-related moves are in play, the absence of which would entice contrarian reversals instead. In central bank speak, yesterday's US Federal Reserve (Fed) Chair Powell's testimony was viewed as optimistic saying the economy is in a good place as well as defending repo operations, crucial for ongoing global central bank liquidity injections to keep share prices moving higher. Real estate and energy were the outperformers for US sectors, while tech and consumer staples were slightly in the red as Microsoft's share prices underperformed.

IG client* and CoT sentiment for Dow

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

After a fresh record high on Monday, Tuesday's result was no different offering another fresh record high that managed to stick towards the end of the session but only just. As it stands the bulk of its main technical indicators remain bullish but once against offering little follow through on most days that has tested conformist breakout strategies. In terms of its components, T-Mobile surged 10% and outperformed following Federal Court approval for a $26bn merger with Sprint (which in turn was up 60%), and Cisco– a component of both Dow and Nasdaq – will be reporting its earnings today.

IG client* and CoT sentiment for Nasdaq

Retail bias remains heavy short here but has dropped slightly from 70% to 68%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

European indices were in for a volatile session befitting its current technical overview that has been at the mercy of risk-related flows as expectations that the coronavirus (COVID-19) cases increase but at a more contained pace may aid indices like the DAX. As a result, a fresh record high for the DAX that breached its short-term resistance level but only slightly, where Lufthansa’s share price recovered and only a few of its components were in the red including Daimler.

IG client* and CoT sentiment for DAX

Overall, the surge in its price has meant that retail traders who are holding a heavy short bias have been dealt another blow, with retail bias rising a notch to an extreme short 78%.

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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