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S&P Remains a Buy, though Risk of Reversal has Grown

S&P Remains a Buy, though Risk of Reversal has Grown

David Rodriguez, Head of Product


Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.

US 500: Retail trader data shows 20.1% of traders are net-long with the ratio of traders short to long at 3.98 to 1. The number of traders net-long is 7.7% higher than yesterday and 18.9% higher from last week, while the number of traders net-short is 2.2% lower than yesterday and 4.6% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Such early shifts can act as warning of a potential trend change, but we would realistically need to see a much larger change towards crowd buying before calling for a meaningful S&P 500 turn lower.

See next article in this week’s report: EURUSD - Euro Forecast to Continue Higher versus US Dollar until this Changes

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.