Why and how do we use the SSI in trading? View our video and download the free indicator here
US S&P 500– An aggressive shift in retail speculative positions in the SPX500, which tracks the fair value of S&P 500 futures prices, acts as strong contrarian signal that the US equity index will likely continue higher through the foreseeable future. Our data shows 72 percent of total open SPX500 positions are short; we most often look to do the opposite and buy.
A key caveat is that these sharp moves can sometimes occur at key sentiment and price extremes—in this case it is possible the S&P 500 sets a near-term top. Those extremes are only clear in hindsight, however, and we would need to see a sharp turn in sentiment to change our bullish trading bias.
See next currency section: EURUSD - Euro Forecast to Fall Further as Retail Crowds buy Declines
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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