Indices wobble as yields rise

Dow Technical analysis, overview, strategies, and levels

It's been a rangebound week for the Dow, its price glued to the highs and failing to offer a play on the Weekly on a lack of a move towards its long-term levels, the Daily's 1st Support level aiding conformist buy-on-reversal strategies as the level held on Thursday. It was Caterpillar (construction and mining equipment company in the current environment) and Dow the outperforming components by the close, most in the red with Nike and Visa both underperforming. US economic data was a beat for preliminary PMIs, existing home sales remaining high. As for the Fed's monetary policy report, it highlighted risks of ongoing business failures and the commercial real estate sector.

IG client^* and CoT^** sentiment for Dow

In sentiment, CoT sell bias has risen to 56% on a bigger reduction in consolidated-Dow shorts (by 2,644 lots) compared to shorts (by only 816 lots), retail bias still in heavy sell territory but further away from extreme levels.

Dow chart with retail and institutional sentiment

Nasdaq Technical analysis, overview, strategies, and levels

A slight red week for the Nasdaq, a brief glance at its Weekly chart and it's still at the highs, the pullback failing to take its price towards its previous Weekly 1st Support, while aiding conformist buy-on-reversal strategies on Thursday as its Daily 1st Support level held. Amongst its components by the close, it was Baidu (CEO hire for its electric car venture with Geely, hopes to launch its first vehicle within three years) clearly on top followed by Applied Materials (earnings beat, improved outlook), the losses for those in the bottom heaviest for Kraft Heinz (analyst downgrade), and both Mondelez and Monster. From a technical standpoint, it’s still a bull trend technical overview in both the Weekly and Daily time frames, the question of whether the rotation into cyclical stocks as growth expectations rise will mean relative underperformance for growth, tech, and the tech-heavy index.

IG client^* and CoT^** sentiment for Nasdaq

CoT speculators remain majority long here, retail bias shifting to a slight buy 51%.

Nasdaq chart with retail and institutional sentiment

DAX Technical analysis, overview, strategies, and levels

The moves remained relatively rangebound for the DAX, failing to offer a play on the Weekly's previous levels and the same was the case for the Daily on both Thursday and Friday, most of its technicals flashing green here but less so when zooming into the Daily, its ADX still showing a propensity to trend in both time frames. Infineon and Deutsche Bank were the relative outperformers by the close for Friday, Beiersdorf and Fresenius relatively underperforming. Economic data showed PPI figures beat estimates to grow 1.4%, a rate unseen since 2008. Preliminary manufacturing and services PMIs remained mixed, the figure expanding and improving for the former while the latter continued to suffer contraction. We've got ifo sentiment figures today.

IG client^*sentiment for DAX

The pullback in price for the week even if small has given a chance for fresh retail shorts to unwind, the heavy sell bias of 72% at the start of last week dropping to 61%. We don't have CoT figures for the DAX, but for US indices they are majority short Dow, S&P, and Russell while majority long Nasdaq.

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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