Skip to Content
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
More View More
Dow Jones, S&P 500 Outlook: Retail Trader Signals Hint to Proceed With Caution

Dow Jones, S&P 500 Outlook: Retail Trader Signals Hint to Proceed With Caution

Daniel Dubrovsky, Senior Strategist

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

  • IG Client Sentiment still warning that the Dow and S&P 500 may fall
  • This would place the focus on year-long rising support, will they hold?
How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by Daniel Dubrovsky
How is IG Client Sentiment a contrarian indicator?
Get My Guide

Last week, IG Client Sentiment (IGCS) – a gauge of retail trader positioning – was warning that the Dow Jones and S&P 500 were at risk of turning lower. IGCS is typically a contrarian indicator, meaning that if long bets are rising in an asset, prices could be vulnerable to a pullback and vice versa.

Since then, volatility has been picking up, with choppiness seen in US stock market benchmarks. Meanwhile, the level of net-long bets in the Dow Jones and S&P 500 have remained elevated compared to recent history. Now, it seems like investors ought to continue remaining on guard.

Dow Jones Sentiment Outlook - Bearish

The IGCS gauge implies that about 38.83% of retail traders are net long the Dow Jones. Upside exposure has increased by 8.85% and 25.54% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort.

Dow Jones Sentiment Outlook - Bearish

Technical Analysis

The Dow Jones formed a Bearish Engulfing candlestick pattern towards the end of last month. This is typically a reversal warning that can appear at the top of a given uptrend, but downside confirmation has been somewhat lackluster. Moreover, the broader uptrend has been holding, supported by rising support from March 2020.

Top Trading Opportunities in Q4
Top Trading Opportunities in Q4
Recommended by Daniel Dubrovsky
What are the top trading opportunities in 2021?
Get My Guide

Dow Jones Futures Daily Chart

Dow Jones Futures Daily Chart

Dow Jones Chart Created in Trading View

S&P 500 Sentiment Outlook - Bearish

The IGCS gauge implies that roughly 46% of retail traders are net long the S&P 500. Upside exposure has climbed by 2.04% and 4.41% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort.

S&P 500 Sentiment Outlook - Bearish

Technical Analysis

The S&P 500 is pressuring long-term rising support from March 2020 after negative RSI divergence preceded a cautious turn lower. A drop through this range could open the door to deeper losses given confirmation. Otherwise, resuming the uptrend would entail a push towards the midpoint of the Fibonacci extension at 3975.

S&P 500 Futures Daily Chart

S&P 500 Futures Daily Chart

S&P 500 Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from March 3rd Report

--- Written by Daniel Dubrovsky, Strategist 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.

DISCLOSURES