S&P 500, Dow Jones, Retail Dealer Positioning, Technical Evaluation – IGCS Wall Avenue Replace
- Retail merchants proceed to purchase Wall Avenue regardless of inventory losses
- From a contrarian standpoint, this might trace at extra hassle
- Will the S&P 500, Dow Jones fall because the US CPI report nears?
In current days, sentiment has been souring on Wall Avenue, pushing the S&P 500 and Dow Jones decrease. That is forward of Thursday’s extremely anticipated US inflation report. One other strong final result may seemingly deliver with it hawkish expectations for the Federal Reserve. That won’t bode properly for Wall Avenue going ahead. For a full synopsis of this dialogue, try the webinar recording above!
Regardless of current losses in shares, retail merchants have continued shopping for into the worth motion, going towards the pattern. This may be seen by IG Consumer Sentiment (IGCS), which tends to operate as a contrarian indicator. With that in thoughts, does this elevated urge for food from merchants to purchase the S&P 500 and Dow Jones spell hassle for Wall Avenue within the coming periods?
S&P 500 Sentiment Outlook – Bearish
The IGCS gauge reveals that about 65% of retail merchants are net-long within the S&P 500. Since most merchants are biased to the upside, this means that costs could proceed falling. That is as upside publicity elevated by 5.22% and 13.31% in comparison with yesterday and final week, respectively. With that in thoughts, the mix of present and up to date modifications in positioning presents a stronger bearish contrarian buying and selling bias.
S&P 500 Each day Chart
On the day by day chart, the S&P 500 stays idling above highs from September 2020. This makes for an inflection zone of assist between 3541 and 3587. A confirmatory breakout below this vary could open the door to downtrend resumption. That exposes the 61.8% Fibonacci extension at 3447. In any other case, maintain a detailed eye on the 20-day Easy Shifting Common (SMA) as resistance earlier than 3820 kicks in above.
Chart Created in Buying and selling View
Dow Jones Sentiment Outlook – Combined
The IGCS gauge reveals that about 58% of retail merchants are net-long within the Dow Jones. Since most buyers are net-long, this hints that costs could proceed falling. However, upside publicity dell by 11.04% in comparison with yesterday, concurrently rising by 8.71% in comparison with final week. Given the current modifications in publicity, this produces a blended contrarian buying and selling bias.
Dow Jones Each day Chart
Dow Jones futures sit above the October third low at 28635 following current losses. The 20-day SMA held as resistance, guiding the pair decrease with the dominant downtrend. A confirmatory breakout below 28635 exposes the 61.8% and 78.6% Fibonacci extensions at 27945 and 27247, respectively. In any other case, clearing the 20-day SMA opens the door to going through key resistance at 30513.
Chart Created in Buying and selling View
*IG Consumer Sentiment Charts and Positioning Knowledge Used from October 11th Report
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the feedback part under or@ddubrovskyFXon Twitter
DailyFX offers foreign exchange information and technical evaluation on the tendencies that affect the worldwide foreign money markets.
