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.

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
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
Bearish
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
Wall Street
Bearish
Gold
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
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • The Dow Jones, S&P 500 and AUD/USD could be at risk of extending losses as retail investors increase upside exposure. What are key technical levels to watch for? Find out from @ddubrovskyFX here:https://t.co/ivQmFUTGdU https://t.co/KuIoM7g9E3
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/38gTDn8ejP https://t.co/FBT1eSZdjF
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/ERyiY47G5H https://t.co/LRL1iD3JDt
  • Even though the Australian Dollar lost some ground this week, support levels held. Bearish developments are brewing in $AUDUSD and $AUDJPY but remain unconfirmed. What else does #AUD face ahead technically? - https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2020/10/24/Australian-Dollar-Technical-Forecast-AUDUSD-AUDJPY-EURAUD-GBPAUD.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/0gHyXW1vHh
  • Forex sentiment analysis can be a useful tool to help traders understand and act on price behavior. Learn how to get the most out of understanding trader sentiment here: https://t.co/LjEjTexrCg https://t.co/9qcanKW0uT
  • Third wave? We haven’t beaten the first wave. Until the virus is under control, the US economy won’t be able to properly heal, plain & simple. The lack of a competent response saps courage. Defeat the virus, then get people back to work. In that order. https://t.co/8R8IyTZejM
  • The British Pound may fall if EU and UK negotiators fail to reach a consensus as the December 31 deadline nears. The third presidential debate is on deck, how might markets react? Find out from @ZabelinDimitri here:https://t.co/kDSYzBDA3t https://t.co/80xL2Hyat7
  • The #Fed b/s hit a record high USD ~7.18T this week! Been awhile since I last did an update so here it is! I smoothened out analysis by using 4W moving averages You can see how into summer #SP500 growth 👇 as the b/s 👇 Since then it flipped until recent fiscal talk jitters https://t.co/4AESBo99dl
  • The US Dollar is losing ground against ASEAN FX, with USD/SGD and USD/IDR possibly readying to extend declines. Will USD/PHP and USD/MYR follow? Find out from @ddubrovskyFX here: https://t.co/l705RWumj5 https://t.co/wySomzNGbm
  • RT @FxWestwater: #Copper Price Forecast: US Q3 GDP and Chinese PMI in Focus - via @DailyFX https://www.dailyfx.com/forex/market_alert/2020/10/23/Copper-Price-Forecast-US-Q3-GDP-and-Chinese-PMI-in-Focus.html https://t.co/SV0GskVO…
S&P 500 Forecast: Stocks Rebound, but will the Recovery Continue?

S&P 500 Forecast: Stocks Rebound, but will the Recovery Continue?

2019-08-07 21:30:00
Peter Hanks, Analyst
Share:

S&P 500 Outlook:

  • As the initial shock of an abrupt trade war escalation fades, uncertainty is still heightened as evidenced by a surge in safe havens like gold and US treasuries
  • That said, stocks were able to rebound from initial losses on Wednesday, posting a second day of gains after it sank nearly 3%
  • Check out the DailyFX Podcast with Andrew Milligan, head of global strategy at Aberdeen Standard Investments

S&P 500 Forecast: Stocks Rebound, but will the Recovery Continue?

The S&P 500 opened Wednesday trading well beneath Tuesday’s close and drilled even lower in the early hours of the session as the risk aversion was mirrored in gold and US treasuries which surged to their highest levels in years. That said, the selloff was short lived as the S&P 500 and other stocks began to regain their footing as the day progressed.

S&P 500 Price Chart: Daily Time Frame (Chart 1)

S&P 500 price chart, daily

Consequently, the S&P 500 closed Wednesday trading 0.08% higher alongside a 0.4% gain in the Nasdaq and a -0.1% loss for the Dow Jones. Trading roughly 2% lower at its trough, a recovery of this magnitude saw the S&P 500 post its largest lower wick since May 10. Apart from the May recovery, Wednesday’s rebound offered the longest lower wick since December 27. For the Dow Jones, the 370-point rebound was the largest since December 10.

Unfamiliar with past trade wars? Check out our guide,ABrief History of Trade Wars.

Evidently, some traders are comfortable with the depth of declines exhibited on Friday and Monday as they now look to purchase shares at a discount. On the other hand, some investors are warning that the knife may continue to fall. As always, the battle of the bulls and the bears rages on, but the fundamental forces behind the initial move still remain and technical resistance now stands in the way of a continuation higher. To that end, RSI on the S&P 500 has crept out of oversold territory and the Index resides narrowly beneath the ascending trendline from late December and May.

S&P 500 Price Chart: Hourly Time Frame (Chart 2)

SPX price chart

If the rebound is to continue, bulls will have to surmount the trendline around 2,885 before they can set their sights higher. Personally, I think It would be presumptuous to say stocks have entirely come to terms with the newest tranche of tariffs. Further, IG Client Sentiment Data reveals that retail traders have reduced their short exposure but remain net short the S&P 500.

S&P 500 price chart

Retail trader data shows 35.2% of traders are net-long with the ratio of traders short to long at 1.84 to 1. The number of traders net-long is 11.9% lower than Tuesday and 14.2% higher from last week, while the number of traders net-short is 1.7% higher than Tuesday and 28.7% lower from last week.

As price action unfolds, follow @PeterHanksFX for updates and analysis on the fundamental and technical factors impacting the S&P 500.

While we typically view IG Client Sentiment data as a contrarian indicator, the fact that continue to shed their short exposure could suggest the selling is not over. In May for instance, traders were overwhelmingly short the S&P 500 and reduced their short positions after the Index declined in the middle of the month. That shift in positioning preceded subsequent losses that occurred as the calendar ticked over into June. Whether history will repeat itself is yet to be seen, but traders should be wary of clinging to hopes of an immediate recovery to all-time highs.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more:Dow Jones, Nasdaq 100, S&P 500 Forecast: ETF Flows Hint at Bearishness

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

DISCLOSURES