Weekly Market Report: Dow, Nasdaq, & DAX
Nasdaq outperforms following Alphabet’s earnings, DAX finishes higher for the week despite ECB disappointment.
DOW: Finishing higher for the week but underperforming compared to the Nasdaq
Last week’s earnings results put most of the attention on the tech sector and powering the Nasdaq to fresh record highs. That hasn’t been the case for this index, finishing only slightly higher for the week and met with retracement instead. US-China trade negotiations restart on Tuesday and that’ll be important for trade related risks, but Wednesday’s FOMC will be more crucial given the bulk of recent gains have been done on anticipated Fed easing and hence open to retracement if the US central bank doesn’t cut rates by at least 0.25%. In terms of retail bias, it has dropped 9% to a still majority short 69% as Wednesday and Thursday’s price drops offered fresh shorts initiated at the highs a chance to close out, while institutional bias has edged even higher to an extreme long 86%.
NASDAQ: Topping 8000 as Alphabet’s earnings impress
The Nasdaq outperformed significantly last Friday following Google’s earnings and massive finish higher, taking the tech index above the infamous 8000 level and keeping its bull trend technical overview intact on both the weekly and daily. Unlike the Dow where retail short bias had a chance to take profit and dropped its bias, here the move higher has squeezed shorts further, with the bias rising 9% for the week to a now extreme short 78%. Institutional bias on the other hand, is unchanged at a majority long 60% with small reductions in both long and short positioning.
DAX: Finishing higher despite ECB disappointment
Going into last Thursday’s ECB announcement, European equities moved higher expecting easing from the central bank. Instead, the disappointment kept gains in check, and prevented this pair’s price from successfully breaching its mid-term resistance level. From a technical standpoint its still bullish, though as with US equities the recent gains were driven primarily by monetary easing expectations and hence remain open to retracement if central bank action can’t match those expectations. Retail bias was in the middle at the start of last week, and it is now at a majority short 64% with the with the upside move enticing fresh shorts into initiating, with the bias reaching 72% mid-week before dropping on some fresh shorts taking profit on Thursday. While earnings results have been better than expected, that's due to analysts’ lower expectations to begin with.
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