S&P 500 Declines Gaining Traction, We See Key Risk
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SPX500 –Retail CFD speculators remain short the SPX500 contract, which tracks the fair value of the S&P 500 futures contract. Yet a sharp shift towards buying warns that stocks may be at risk of a lasting turn lower.
Trade Implications SPX500 – It remains a fool’s errand to call THE top in equity markets, and indeed our data shows that the majority of retail traders have remained short SPX500 since it traded near $1350 in November, 2012.
Yet total long positions have surged by nearly 50 percent in the past week, and a contrarian view of crowd sentiment suggests we’re at a potentially significant turning point for stocks. It will be critical to watch the S&P 500 hold important near-term support, else we’ll turn in favor of further weakness.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.