SPX500 –Retail speculators have sold the SPX500 aggressively as it bounces off of recent lows, and a contrarian view of crowd sentiment suggests it may soon press to fresh peaks.
Trade Implications – Our SSI data shows that short interest in the SPX500 jumped 17% since last week, while long interest tumbled 53%. A purely contrarian view of retail crowd sentiment points to further gains. Yet it is worth noting that the ratio of short to long positions reached far higher at 12:1 as the SPX500 hit multi-year highs. The record SSI ratio may have actually pointed to a significant top and as such our SSI-based bias is admittedly unclear until we see more concrete signs of reversal.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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