S&P 500 Sentiment Warns of Short-term Topping Potential
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US 500: Retail trader data shows 17.3% of traders are net-long with the ratio of traders short to long at 4.77 to 1. The number of traders net-long is 8.7% higher than yesterday and 12.8% higher from last week, while the number of traders net-short is 2.1% higher than yesterday and 1.2% higher 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. Recent changes in sentiment warn that the current US 500 price trend may soon reverse lower despite the fact traders remain net-short.
--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
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