SPX500 –I’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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