Dow Jones, S&P 500, Fed, Retail Trader Positioning, Technical Analysis – IGCS Wall Street Update
- Retail merchants have been rethinking their bets on Wall Street
- Dow Jones and S&P 500 lengthy publicity has been on the rise
- This is warning that additional losses could also be in retailer for shares
Volatility appears to be seeping its approach again into Wall Street as the Dow Jones and S&P 500 set course for his or her worst week because the center of June. Some of this might be defined by markets rethinking a few Fed ‘pivot’ in 2023. That can be not the one factor that merchants have been rethinking.
Looking at IG Client Sentiment (IGCS), it appears retail merchants have been shopping for into Wall Street’s losses. IGCS tends to perform as a contrarian indicator. With that in thoughts, if positioning continues heading on this route, might additional losses be in retailer for stock markets?
Dow Jones Sentiment Outlook – Bearish
The IGCS gauge exhibits that about 40% of retail merchants are net-long the Dow Jones. Since most traders are nonetheless majority quick, this appears to trace costs could preserve rising. However, upside publicity elevated by 8.2% and 60.98% in comparison with yesterday and final week respectively. Taking this into consideration, it appears current shifts in sentiment trace that the Dow Jones could quickly reverse decrease.
Dow Jones Daily Chart
After Dow Jones futures turned decrease on the falling zone of resistance from the start of this 12 months, costs confirmed a breakout underneath the 20-day Simple Moving Average (SMA). This might spell hassle, putting the deal with the 38.2% Fibonacci retracement at 32486 beneath. Soon after, the 50-day SMA might maintain as assist. Otherwise, a breakout underneath the latter could open the door to extending losses.
S&P 500 Sentiment Outlook – Bearish
The IGCS gauge exhibits that about 40% of retail merchants are net-long the S&P 500. Since most of them are nonetheless biased to the draw back, this hints that costs could proceed rising. Just just like the Dow Jones, right here upside publicity has elevated by 6.57% and 25.10% in comparison with yesterday and final week respectively. These adjustments warn that the S&P 500 might reverse decrease forward.
S&P 500 Daily Chart
After S&P 500 futures turned decrease on the falling trendline from January, costs subsequently broke underneath the 20-day SMA. That has opened the door to extending losses, putting the deal with the 38.2% Fibonacci retracement at 4064. Further weak point would place the deal with the 50-day SMA, which can maintain. Otherwise, resuming the broader downtrend has the 61.8% retracement degree in sight at 3902.
*IG Client Sentiment Charts and Positioning Data Used from August 23rd Report
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the feedback part beneath or @ddubrovskyFX on Twitter