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FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

2020-05-27 03:30:00
Daniel Dubrovsky, Analyst
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FTSE 100, S&P 500, CAC 40, Trader Positioning - Talking Points

  • FTSE 100 and S&P 500 may fall on positioning signals
  • CAC 40 may rise as investors unwind net long positions
  • Find your trading personality & optimal forms of analysis

In this week’s session on IG Client Sentiment, I discussed the outlook for global equities such as the FTSE 100, S&P 500 and CAC 40. Fundamental and technical analysis were also examined. For further details, check out the recording of the session above.

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FTSE 100 Sentiment Outlook

The IG Client Sentiment (IGCS) gauge implies that 55.90% of retail traders are net long the FTSE 100. Compared to its US counterpart, the S&P 500, the UK benchmark stock index continues to trade in a relatively range-bound dynamic since late March. In these conditions, investors try to sell at highs while buying at lows. Indeed, on the IGCS FTSE 100 chart below, you can see swings in positioning as prices consolidate.

Net long positioning is up 49.53% and 26.11% from yesterday and last week respectively. Meanwhile net short bets are down 12.02% and 8.04% over the same period respectively. The combination of current sentiment and recent changes produces a stronger bearish contrarian trading bias

FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

FTSE 100 Technical Analysis

From a technical standpoint, negative RSI divergence shows that upside momentum in the FTSE 100 is fading. At times, this can precede a turn lower. Such an outcome may place the focus on what may be a rising trend line from the middle of May on the 4-hour chart below. Also sitting below is an inflection area between 5861 – 5955. Taking these out exposes May lows which make for a range between 5661 – 5709.

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FTSE 100 4-Hour Chart

FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

UK 100 Chart Created in Trading View

S&P 500 Sentiment Outlook

The IGCS gauge implies that 25.06% of traders are net long the S&P 500. This is down from an over 60% upside bias around the time the index bottomed in late March. Since then, prices have climbed by over 37%. Net long bets are up 15.75% and 6.72% from yesterday and last week respectively. Recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort.

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FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

S&P 500 Technical Analysis

S&P 500 futures have pushed through key resistance through 2944 – 2965, opening the door to resuming the dominant uptrend since late March. Recently, prices seemed to have stalled under a new resistance point established around 3019. A turn lower from here places the focus on a potential rising trend line from the middle of May. Taking this out and the former resistance range (2944 – 2965) may open the door to testing support at 2908 on the 4-hour chart below.

S&P 500 Futures 4-Hour Chart

FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

S&P 500 Futures Chart Created in Trading View

CAC 40 Sentiment Outlook

The IGCS gauge implies that 42.51% of CAC 40 traders are net long. Similar to the FTSE 100, the French benchmark stock index has generally been tending to trade sideways since late March. This has opened the door to investors attempting to pick well-established turning points as prices oscillate.

At the time of writing, those net long have declined by 8.06% and 21.08% from the prior day and week respectively. Traders are also further netshort over the same time horizons and the combination of current sentiment and recent changes signals a stronger bullish contrarian trading bias.

FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

CAC 40 Technical Analysis

CAC 40 futures are attempting to push above the 2018 low at 4552. This price has shown to be a key inflection point on multiple occasions since March. Further gains place the focus on resistance at 4698 which is the April peak. Otherwise, a turn lower exposes a potential rising trend line from earlier this month – red line on the 4-hour chart below.

CAC 40 Futures 4-Hour Chart

FTSE 100, S&P 500, CAC 40 Forecasts: Analyzing Signals in Positioning

CAC 40 Futures Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from May 27 Report

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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