Rangebound action for Dow Jones and Nasdaq fails to offer a play
CoT speculators remain majority sell in Dow Jones, Nasdaq and Russell, while shifting to slight buy in the S&P 500.
Dow Technical analysis, overview, strategies, and levels
The ongoing rangebound movement near the highs meant price failed to reach its previous Weekly levels and in turn resulted in a lack of a play, while on the Daily, Thursday's price gains gave conformist breakouts little with prices retracing back down on Friday. That its price is so close to the highs has kept plenty of technical boxes green – more so in this time frame – but means caution when it comes to conformist vs. contrarian strategies. Component performance put Amgen and Merck on top (both recovering off of lows suffered earlier in the week), most in the red on Friday where Chevron (and the energy sector in general) were in the very bottom. We've got manufacturing data today out of ISM and Markit, and the Fed's Powell speaking.
IG client* and CoT** sentiment for Dow
For traders, the bias is majority short and has dropped for retail traders from a heavy sell 70%, on the CoT front about 200 lot changes in both longs and shorts each taking it a notch lower to 57%.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Although tech as a sector didn't suffer as much as energy, it was a relative underperformer finishing lower, and meant the Nasdaq was in for slight retreat on Friday, conformist Daily buy strategies failing on a lack of follow-through, its short-term resistance level (more visible on the daily chart) managing to hold. For the Weekly, the technical boxes are losing some of their positive shine, though its price so close to the highs meaning they could easily tilt once more on another leg higher. Tesla and Vertex (earnings and revenue beat) were the outperforming components on Friday, with big losses on the other end for Skyworks (on outlook as earnings beat estimates), other semiconductors like KLA and Lam also hovering near the bottom.
IG client* and CoT** sentiment for Nasdaq
CoT bias is slight sell and up a notch at 53% as longs drop by 545 lots, while retail bias shifted on Friday's price drop to an opposite slight buy 54%.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
Given how narrow the short-term moves have been, last Thursday's break took its price below its previous support levels with ease, and meant contrarian sell breakout strategies on the Daily outperformed. A brief glance at the Weekly and its price has only slightly retraced off recent highs, and there wasn’t a play for conformist and contrarian traders on a lack of a move towards its key Weekly levels. MTU Aero Engines and Fresenius were the components outperforming on Friday, but a vast majority were in the red, BASF and Delivery Hero in the very bottom. German economic data showed preliminary GDP contract with a -1.7% reading that was worse than expected for the quarter (while its previous was revised higher). We'll get retail data and manufacturing shortly.
IG client*sentiment for DAX
As for sentiment, any unwinding in price even if small is a plus for retail traders, the heavy sell 69% bias at the start of last week dropping to 61% 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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