Dow Jones, S&P 500, FTSE 100 Forecast: Are Retail Traders Betting on Reversals?
Dow Jones, S&P 500, FTSE 100, Technical Analysis, Retail Trader Positioning - Talking Points
- Key stock market benchmarks trading within bearish chart patterns
- IGCS shows mixed outlooks for Dow Jones, S&P 500 & FTSE 100
- Learn to use IGCS in your trading strategy via webinar recording
In this week’s session on IG Client Sentiment (IGCS), I covered the outlook for equities such as the Dow Jones, S&P 500 and FTSE 100. IGCS is typically a contrarian indicator. For a more in-depth analysis of where these assets may go, including coverage of fundamentals, check out the recording of the webinar above.
Dow Jones Sentiment Outlook - Bullish
The IGCS gauge implies that roughly 30% of retail traders are net long the Dow Jones Industrial Average. Upside exposure has decreased by 3.16% and 18.86% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a stronger bullish contrarian trading bias.
Dow Jones Technical Analysis
Dow Jones futures are trading within a bearish Rising Wedge chart pattern as positive RSI divergence shows upside momentum fading. A break under the formation could open the door to extending losses. Otherwise, prices may aim to test the midpoint of the Fibonacci extension at 31500.
Dow Jones Futures Daily Chart
S&P 500 Sentiment Outlook - Neutral
The IGCS gauge implies that about 38% of retail traders are net long the S&P 500. Downside exposure has decreased by 2.01% over a daily basis while increased by 5.13% over a weekly period. From here, the combination of current sentiment and recent changes offers a further mixed trading bias.
S&P 500 Technical Analysis
S&P 500 futures are also trading within a bearish Rising Wedge, with a breakout under the pattern raising the risk of a reversal. For the time being, prices continue to trade higher within the formation, with the index eyeing the 50% Fibonacci extension at 3904.
S&P 500 Futures Daily Chart
FTSE 100 Sentiment Outlook - Bearish
The IGCS gauge implies that about 60% of retail investors are net long the FTSE 100. Upside exposure has climbed by 23.06% and 33.19% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a stronger bearish contrarian trading bias.
FTSE 100 Technical Analysis
Like the Dow Jones and S&P 500, the FTSE 100 also find itself climbing within a bearish Rising Wedge. Prices recently rejected a combination of the March 2020 high and 78.6% Fibonacci extension. This could lead to a retest of wedge support, where a bounce could precede uptrend resumption.
FTSE 100 Daily Chart
*IG Client Sentiment Charts and Positioning Data Used from January 12th 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.