As Losses Mount, Retail Traders Become More Bullish

Dow Jones, S&P 500, Retail Trader Positioning, Technical Analysis – IGCS Equities Update

• In current days, the Dow Jones and S&P 500 have been falling
• Retail merchants responded by growing their bearish publicity
• This is an indication that additional losses could also be in retailer in days forward

In current days, equities on Wall Street have been aiming decrease, with the Dow Jones and S&P 500 touching their lowest factors for the reason that finish of March. In response, retail merchants have been growing their upside publicity. This may be seen by IG Client Sentiment (IGCS), which frequently features as a contrarian indicator. Is this an indication that additional ache is likely to be in retailer for stock markets?

Dow Jones Sentiment Outlook – Bearish

According to IGCS, about 37% of retail merchants are net-long the Dow Jones. Since most of them are nonetheless biased to the draw back, this hints that costs might proceed rising down the highway. This is as upside publicity decreased by 1.59% in comparison with yesterday whereas growing by 10.41% versus per week in the past. Recent adjustments in publicity warn that the Dow Jones might prolong its current slide.

Dow Jones Technical Analysis

On the each day chart, the Dow Jones has damaged underneath the 20-day Simple Moving Average (SMA). This follows a sequence of cautious losses for the reason that starting of April. Now, the 38.2% Fibonacci retracement degree has been uncovered at 32709. Beyond that sits the important thing 31738 – 32017 assist zone. A flip again above the SMA locations the give attention to the April excessive at 34275.

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S&P 500 Sentiment Outlook – Bearish

According to IGCS, about 39% of retail merchants are net-long the S&P 500. Since most merchants are nonetheless biased decrease, this hints that costs might proceed rising down the highway. But bearish publicity has decreased by 1.67% and 0.94% in comparison with yesterday and final week, respectively. With that in thoughts, current adjustments in positioning warn that the present value development might proceed decrease.

S&P 500 Technical Analysis

On the each day chart, the S&P 500 has confirmed a breakout underneath the 20-day SMA. That has additionally uncovered the 23.6% Fibonacci extension degree at 4005. Clearing the latter would open the door to revisiting the March low at 3839. Otherwise, within the occasion of a flip greater, additional positive aspects would place the give attention to the April 18th excessive of 4164.

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— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com