S&P 500 Remains a Buy until this Changes

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US S&P 500– Retail traders are their most short the SPX500—a CFD which tracks the price of the US S&P 500—since its inception. A contrarian view of crowd sentiment thus leaves us firmly in favor of buying into S&P gains until this changes.

The clear caveat remains unchanged: such impressively one-sided positioning often coincides with significant price extremes and reversals. These extremes are by definition only clear in hindsight, however; the S&P 500 has continued onto fresh highs despite our warnings. We would ultimately need to see a substantial shift in crowd sentiment to call for a sustained turn lower. Until that happens there is little reason to abandon our bullish S&P 500 trading bias.

See next currency section: EURUSD - Euro Forecast Could Shift Rapidly

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

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