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Retail Sentiment Catches Near-Exact Top in the SPX - What Now?

By , Quantitative Strategist
06 June 2013 15:50 GMT
ssi_spx500_body_Picture_15.png, Retail Sentiment Catches Near-Exact Top in the SPX - What Now?

SPX500I’ll be the first to admit when I’m wrong, and really I’d rather be lucky than ‘good’. But clear retail sentiment extremes timed almost the exact top in the S&P 500—I think this is only the beginning.

Trade Implications – To quote the SSI report from the day after the S&P 500 topped (appropriately titled: SPX500 Probably Set a Significant Top), “It’s never fun to be faked out on a bear trap…,but we think this could be the start of a much larger decline.

I could sit here all day and pat myself on the back for that one, but I’d 1: probably lose some readers, and really, I like you all; 2: it’s far more useful to look forward. Since last week, retail CFD long interest in the SPX500 has surged 57 percent, while short interest has fallen 24 percent. Net-positioning is still net-short as the SSI is at -2.0, but the substantial shift leaves us plainly in favor of further short-term weakness.

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

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06 June 2013 15:50 GMT