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Dow Jones May Rise on Positioning Signals, S&P 500 Eyes Resistance

Dow Jones May Rise on Positioning Signals, S&P 500 Eyes Resistance

Daniel Dubrovsky, Strategist

Dow Jones, S&P 500, Trader Positioning - Talking Points

In this week’s webinar on IG Client Sentiment (IGCS), I discussed the outlook for equities such as the Dow Jones and S&P 500. For a more detailed overview including fundamental analysis, check out the recording in the video above.

Dow Jones Sentiment Outlook - Bullish

The IG Client Sentiment (IGCS) implies that 40.74% of traders are net long the Dow Jones. Those with exposure to the downside have increased by 7.07% and 22.34% over a daily and weekly period respectively. The combination of current sentiment and recent changes offers a stronger bullish contrarian trading bias. Psychologically speaking, that may speak to a rising share of traders attempting to pick the next top.

Dow Jones May Rise on Positioning Signals, S&P 500 Eyes Resistance

Dow Jones Technical Analysis

Dow Jones futures may be on the verge of pushing above the falling trend line from June’s top. This follows the 50-day simple moving average (SMA) holding at the beginning of this week. Yet, key resistance sits above as the 20-day SMA and the 26193 – 26658 barrier. Pushing above the latter may open the door to revisiting last month’s peak where resistance may hold at 27624. A drop through 24409 opens the door for a reversal.

Dow Jones Futures - Daily Chart

Dow Jones May Rise on Positioning Signals, S&P 500 Eyes Resistance

Dow Jones Chart Created in Trading View

S&P 500 Sentiment Outlook - Neutral

The IGCS gauge implies that 32.19% of traders are net long the S&P 500. This is up from about a 25% upside bias before the index topped in early June. Since then, the S&P 500 has declined over 4.5%. Those that are net long have decreased by 13.53% from yesterday while increasing by 5.97% compared to last week. The combination of current sentiment and recent changes gives a further mixed outlook for the S&P 500.

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Dow Jones May Rise on Positioning Signals, S&P 500 Eyes Resistance

S&P 500 Technical Analysis

On the daily chart below, S&P 500 futures are pressuring the falling trend line from June and the 20-day simple moving average. Climbing above these key technical barriers still leaves the 3118 – 3156 resistance zone immediately above. Taking this are out could pave the way for a retest of 3231. Otherwise, falling through the 50-day SMA exposes the 2903 – 2965 support range.

S&P 500 Futures – Daily Chart

Dow Jones May Rise on Positioning Signals, S&P 500 Eyes Resistance

S&P 500 Futures Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from June 30 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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