Equities retrace off the lows in classic risk-on play

Bearish technical overviews in equities prone to a shift if fundamental risk-on mood persist.

DOW: Technical indicators shift back to neutral as stimulus talk aids in taking equities off the lows

The latest price move higher has put a major dent in its bear trend technical overview that is stalling heavily and needing (very) little to shift back to a more consolidatory outlook but with an underlying that is still volatile and a trending ADX incentivizing breakout strategies over fading ones. The index’s bear trend line is barely holding, but it’s whether the current risk-on atmosphere can continue to hold that’ll be the main determinant of where its price heads next, especially with tax cut talk and global stimulus circulating. In terms of earnings, Home Depot will be releasing its figures ahead of further US housing data this week, and the stock outperformed yesterday ahead of the release.

NASDAQ: Bear trend line broken as DMI turns positive and ADX remains trending

The outlook for the Nasdaq is more positive than that of the Dow from a technical standpoint, but both have been at the mercy of fundamental forces that have whipsawed the indices’ prices and infused it with volatility, enticing (for the most part) breakout strategies (be it to the upside or downside) and reversal over fading strategies. Its DMI has turned positive and combined with a trending ADX usually translates into upside movement from a technical standpoint. Though if the risk-on mood doesn’t persist could be met with retracement. Retail bias is 5% higher at a heavy short 68% as longs initiated at lower prices continue to get enticed into closing out.

DAX: Bear trend technical overview tested heavily as German stimulus talk powers the DAX higher

The initializing bear trend technical overview for this index is already suffering heavily with retracement off the lows testing negative technical bias that although still remains on the weekly, is evaporating more on the daily with most of its indicators shifting back to neutral and its ADX no longer showing a propensity to trend. Overall however, while stimulus talk from the German government is promising and 10-year yields rising off the lows are still heavily in negative territory, translating that into short-term higher share prices will be a tough sell as investor preference shifts to dividend paying stocks that in the current environment will be tougher for German companies set to operate in what could be an official recession. From a sentiment standpoint, retail bias is on the verge of shifting back to majority short having dropped 5% to a slight long 53% on long-profit taking and what has predominantly been range-trading in the index.

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