News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • What's the difference between leading and lagging indicators? Find out from here: https://t.co/vGx8HCrRwD https://t.co/7w5jodyzj0
  • Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, it can cloud judgment and overshadow logic. Learn how you can control FOMO in your trading here: https://t.co/lgDf5cVYOn https://t.co/L3LPCph2ST
  • Make smart trading decisions with your free guide to trade the news. Download your free guide here.https://t.co/pb5E2KgRzW #DailyFXGuides https://t.co/ysxKO30ZWw
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/5nHxtlZ7nn
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/lqpXwWjVFt
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/rfwUWJfbz9 https://t.co/CrpXuYgfRO
  • MACD who? The Moving Average Convergence Divergence (MACD) is a technical indicator which simply measures the relationship of exponential moving averages (EMA). Find out how you can incorporate MACD into your trading strategy here: https://t.co/ZNs4Qi8ieG https://t.co/VzEbQn8blk
  • Brush up your knowledge on trade-wars with this tool from DailyFX research briefly outlining trade-war history dating back to the early 1900s here: https://t.co/bZEFtp8kFe https://t.co/ETF52Q2sLz
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/AXZxK8Abrh
  • Global stock markets may see turbulent volatility if darkening clouds over Washington’s relations with Beijing turn into a geopolitical storm. Which assets will be the lifeboat? Find out here:https://t.co/RkFI6qAyik https://t.co/9Ppa4d48Ql
S&P 500 Rallies as Key Insiders Dump Stock, Traders Add Shorts

S&P 500 Rallies as Key Insiders Dump Stock, Traders Add Shorts

Thomas Westwater, Analyst

S&P 500, Market Sentiment, Insider Activity, Retail Trader Positioning – Talking Points

  • IG Client Sentiment net-short positioning grows and sends a contrarian bullish signal
  • Key executives of top S&P 500 companies liquidate stock amid the coronavirus pandemic
  • Lack of optimism within companies, particularly among CFO’s, seems ominous

The S&P 500 has recovered nearly all losses since the COVID-19 pandemic sent markets into a tailspin earlier this year. Since the stock market bottomed back in March, the S&P 500 has gone on to climb over 40%. However, the current rally across risk assets seems untrusted by some investors as awareness of equity fundamentals appears lacking – or largely ignored.

Regardless, the S&P 500 index continues to tick highereven as COVID-19 infection rates jump higher in the United States. Perhaps the relentless uptrend is owed primarily to the flurry of support from monetary and fiscal authorities.

S&P 500 Index (Daily Price Chart)

S&P 500 index price chart

Source: IG Charts

That said, in the wake of these unprecedented times and lingering volatility, being mindful of sentiment and market positioning can provide useful insights about the expected direction of stocks. One way of doing so, is by viewing IG Client Sentiment, which offers a view on retail client positioning, derived from live IG retail traders. It is important to note that client sentiment is typically regarded as a contrarian indicator. Moreover, extreme levels often warrant paying greater attention to.

According to the latest IG Client Sentiment Report, retail traders maintain a net-short position on the S&P 500 index. The chart below reveals that 71% of traders are net-short the S&P 500 as of Thursday. As previously mentioned, being a contrarian indicator, IG Client Sentiment sends a bullish signal for S&P 500 price action. Further, this past week witnessed an increasingly net-short position taken on by retail traders even as the S&P index continued to trend higher.

US 500 Client Positioning (Daily Price Chart)

US 500 Client Positioning chart

Source: DailyFX

In comparison to retail trader positioning, we can look at corporate insider transactions to serve as another bellwether for market sentiment. Unlike IG Client Sentiment, however, key insider activity is more straightforward: insider buying is generally viewed as bullish and selling as bearish.

The reason being is that corporate executives are thought to have a more informed picture of regarding long-term business prospects and where their company is headed. Yet, there are some nuances to consider when viewing the data and thus limits its usefulness to broad-based generalizations.

Insider Transactions within the 10 largest S&P 500 companies by market capitalization

Insider trading chart

Source: SEC, BBG

Nevertheless, when looking at insider transactions within the top ten companies in the S&P 500 by market cap, which comprises nearly 28% of the index weight, a bearish picture emerges. In total, and excluding warrants and gifts, which are often scheduled transactions, selling of equities within the top 10 companies vastly outweighs insider buying, with net sales totaling almost $2.6 billion since March 2020. This selling activity could indicate that corporate executives view a rough time ahead for their companies.

Likewise, and in line with sentiment reflected by recent insider transactions, data on CFO optimism, provided by Duke University’s Fuqua Business School, exhibits an increasingly pessimistic view of not only the overall economy, but also regarding their own firms. As the most senior executive responsible for managing a company’s finances, chief financial officers have a particularly unique position to judge the projected path of revenue and earnings for a company. According to Duke’s CFO survey, levels are suppressed to near historical lows.

Duke CFO Global Business Outlook

CFO Business outlook chart

Source: Duke University Fuqua School of Business

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

DISCLOSURES