Weekend gaps get filled in Dow and Nasdaq, tech outperforms
Apple posts better than expected earnings, more tech firms to release today
Dow Technical analysis, overview, strategies, and levels
The focus yesterday was on two fronts, (1) risk appetite in the face of the corona virus, as well as (2) Apple's earnings results which beat expectations, and as a result in terms of the Dow's components Apple, intel and Microsoft were on top, with only a few in the red at the bottom. As for sectors overall, no surprise that the tech sector was the outperformer, though all were in the green. US data yesterday was mostly positive, with durables up overall but contracting at its core, CB's consumer confidence registering a healthy increase, and the Fed's Richmond manufacturing index exiting contraction. Up next it'll be the US Federal Reserve's monetary policy announcement, crucial in the context of what to expect this year. While we can expect more earnings today, the real focus will be on tech stocks and hence it'll be the tech index that could be more affected by the results.
IG client* and CoT sentiment for Dow
* 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
Dow chart with retail and institutional sentiment
Nasdaq Technical analysis, overview, strategies, and levels
Apple's earnings impressed, and attention is quickly shifting to other earnings as more tech stocks are set to announce theirs including Tesla and Microsoft, and where Amazon will release its figures tomorrow. That means the Nasdaq as a tech index and whose components include the above mentioned names may be more influenced by the results, though where investor risk will stand will no doubt play a part, as well as the Fed's decision this evening.
IG client* and CoT sentiment for Nasdaq
On the sentiment front, the recovery to fill the weekend gap has put pressure back on retail short positions, with heavy short bias rising a couple notches to 67%.
* 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
Nasdaq chart with retail and institutional sentiment
DAX Technical analysis, overview, strategies, and levels
From a technical standpoint – and it has certainly meant less as of late – the DAX's price managed to recover to cross back above its 50-day moving average with only a few of its components in the red including SAP following its mixed earnings release, and where most of its main technical indicators remain neutral though combined with a trending ADX (Average Directional Index) that might entice contrarian breakout strategies over conformist reversals. The direction however is less clear with other indicators mixed, its price above all its main long-term moving averages (MA) but below all its short-term MA’s. Light German data will be released including GfK's consumer climate figure and import prices, and following worse than expected IFO figures earlier this week. As always and as with the Dow and Nasdaq, expect overall risk appetite to influence equities globally as a whole in terms of where its price may settle.
IG client and CoT sentiment* for DAX
* 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
DAX chart with retail and institutional sentiment
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