Dow Jones, S&P 500, Retail Trader Positioning, Technical Analysis – IGCS Wall Street Update
- Wall Street witnessed the most effective 2-day acquire since April 2020
- Retail merchants have been promoting the Dow Jones, S&P 500
- Bullish Engulfings trace there may be extra room to rise
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Over the previous 2 days, Dow Jones futures have rallied 5.43%, probably the most aggressive push since April 2020. Meanwhile, S&P 500 futures gained 5.6% over the identical interval. This adopted a larger-than-expected dip in US job openings, inflicting merchants to pare again hawkish Federal Reserve financial coverage expectations.
Retail merchants have been responding, although not in the way in which you may suppose. According to IG Client Sentiment (IGCS), merchants have been rising their brief publicity on Wall Street. IGCS tends to perform as a contrarian indicator. With that in thoughts, may there be extra positive factors in retailer for shares forward?
Dow Jones Sentiment Outlook – Bullish
The IGCS gauge exhibits that about 53% of retail merchants are net-long the Dow Jones. Since most merchants are nonetheless on the bullish aspect of issues, this hints costs could proceed falling. However, brief publicity climbed by 18.67% and 63.94% in comparison with yesterday and final week, respectively. These current modifications in positioning are hinting costs could reverse larger.
Dow Jones Daily Chart
Dow Jones futures confirmed a Bullish Engulfing candlestick sample. This has opened the door to a continuation of current positive factors. That stated, regardless of the spectacular rally, the Dow Jones has not examined the near-term 20-day Simple Moving Average. This may reinstate the draw back focus. If not, that may expose the 50-day line. Broadly talking, the falling zone of resistance from the top of final yr is sustaining the draw back bias. This means there may be loads of room for restoration with out essentially overturning the bearish bias.
S&P 500 Sentiment Outlook – Bullish
The IGCS gauge exhibits that about 57% of retail merchants are net-long within the S&P 500. Since most merchants are nonetheless lengthy, this hints costs could proceed falling. But, draw back publicity elevated by 11.88% and 17.09% in comparison with yesterday and final week, respectively. These current modifications in positioning trace that costs could reverse larger forward.
S&P 500 Daily Chart
Like the Dow Jones, the S&P 500 has confirmed a Bullish Engulfing candlestick sample. This could open the door to additional positive factors. Prices stay under the 20-day SMA. Confirming a breakout above it may lengthen the push larger. Still, the falling trendline from the start of this yr is sustaining the broader draw back bias. As such, there’s a good quantity of room for restoration with out essentially overturning the bearish bias.
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*IG Client Sentiment Charts and Positioning Data Used from October 4th Report
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the feedback part under or@ddubrovskyFXon Twitter