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SPX500 Probably Set a Significant Top

By , Quantitative Strategist
23 May 2013 14:45 GMT
ssi_spx500_body_Picture_17.png, SPX500 Probably Set a Significant Top

SPX500There’s increasingly clear evidence that we may have seen a substantial S&P 500 top, and retail CFD trader sentiment suggests this might be the start of much bigger declines.

Trade Implications – To quote last week’s SSI report: “Total short interest in the SPX500 contract remain near record-highs as there are far too many retail traders trying to catch THE top. Yet it’s far more interesting to note what’s going on with the other side of the trade: the number of open orderslong surged by over 50 percent in the past week.”

Since then long interest has risen a further 23 percent, while short interest is down 20 percent in the same stretch. It’s never fun to be faked out on a bear trap (in plain English, selling into a breakdown that’s quickly retraced), but we think this could be the start of a much larger decline.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

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23 May 2013 14:45 GMT