Week of volatility gives a record high for Dow and Nasdaq
CoT bias remains majority long, while retail sentiment is an opposite heavy short.
Dow Technical analysis, overview, strategies, and levels
The Dow, Nasdaq and S&P enjoyed record highs last week, even if a disappointing US Non-Farm Payrolls report sent indices retracing off the highs on Friday. In terms of sectors, real estate and utilities were in the green on Friday, while the rest were contracting with financials suffering the most. The technical overview remains bullish, and despite Friday’s retracement its price did go beyond last week’s Weekly 1st Resistance in what was a rare intraweek breach. We do get earnings from financial companies this week, with JPMorgan on Tuesday.
IG client and CoT sentiment for Dow
As for sentiment, retail bias remains in heavy short territory and no doubt squeezed by the latest upside moves. Institutional bias as per the latest CoT (Commitment of Traders report) is in heavy long territories and up a notch, due to a larger reduction in long positions than short ones.
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Last week was a tricky one for the Nasdaq, but one where breakout strategies panned out as the tech index made a fresh record high and the tech sector relatively outperformed.
IG client and CoT sentiment for Nasdaq
Throughout the week retail bias was in extreme short territory, rising slightly intraweek as shorts got more comfortable entering the market, but reducing that bias to a heavy short 73% at the start of this week. On the CoT front majority long bias has dropped 4% to a more moderate 57% long bias on a reduction in long positions by 1,469 lots.
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
After flirting with fresh lows earlier in the week, the DAX managed to recover on Wednesday after fresh updates regarding geopolitical tensions, and in the process take its price beyond last week's Weekly 1st Resistance level and keep its stalling bull trend technical overview intact on the weekly. On the daily, the outlook is more consolidatory, offering less of a chance for breakout opportunities unless significant news hits the wires enticing contrarian breakout strategies over conformist reversals.
IG client and CoT sentiment for DAX
In sentiment, retail bias moved towards extreme short territories - as has been the case with the Dow and Nasdaq – rising from a majority short 64% at the start of last week.
DAX chart with retail and institutional sentiment
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