Retail shorts take profit as Dow, Nasdaq, and DAX drop
Indices take a hit on diminishing trade talk hopes ahead of US-China trade meeting tomorrow, bias shifts to the middle in the German DAX.
DOW: Risk-off appetite hits the index hard as trade deal hopes fall
Indices got hit hard yesterday on a reduction in trade deal hopes, and the Dow wasn’t spared the plummet, which sent its price below both 50-day and 100-day moving averages (MA's) and a cross as its 50-day MA moved below its 100-day MA yesterday. However, keep in mind that for this index (and other indices in this report), the technical indicators are close to each other and hence a price cross occurrence is more likely and will generate more false signals. The downside movement has been a boon for retail traders, with majority short bias down 6% to a 56% on short profit-taking. Volatility strategies remain more ideal here with a trending Average Directional Index (ADX) and trade talk, as well as tonight's Fed minutes.
NASDAQ: Not spared yesterday’s plummet in equities
As with the Dow and other US (and European) indices, it was a tough finish lower for this index, with its price crossing below both the 50-day and 100-day moving averages, with only its 200-day MA remaining. But as with the Dow, retail traders aren’t complaining here either, with profit-taking on shorts taking the bias 5% lower to a majority short 61% and erasing some of its long-term positive technical bias on the weekly outlook. Trade talks tomorrow and the Fed’s minutes tonight ought to keep the index jumpier than usual should any significant items emerge.
DAX: Retail bias shifts again as price drop aids range-trading shorts
Range-trading remains heaviest for the German index, and as a result the small price drop pushed yesterday’s majority short 58% bias back towards the middle on short profit-taking. Yet again, its price briefly crossed but failed to stay above its 100-day moving average, but it did cross and finish below its 50-day moving average. As with the remaining indices in this report, all that remains is its 200-day moving average as seen on the daily chart. Volatility strategies remain most ideal in times of uncertainty and where technical signals are too closely huddled to each other, for limited profit-taking until a clearer picture emerges.
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