Watch Market Sentiment Carefully as Uptrends Hold

Wall Street, Dow Jones, S&P 500, Technical Analysis, Merchant Location – Talking Points

• Betting traders are betting that the Dow Jones may fall lower, will S&P follow?
• High trends are held in both indices, with S&P 500 looking at bearish signals
• Check out my website recording of this week’s session to learn more

On this week’s IG Customer Sentiment (IGCS) website, which is a tool for measuring retailer trading, I discussed the prospect of the Dow Jones and S&P 500. IGCS is usually an opposite indicator. For a detailed analysis, take a look at the recording of the session above, where I discussed how to use IGCS in business strategy. I also addressed the fundamental outlook for U.S. benchmark stock indices.

Perspective of Sensitivity Dow Jones – Ursa

La IGCS gauge implies that about 37% of retailers are short of Dow Jones. Top exposure increased by 10.87% and 15.50% respectively daily and weekly. The fact that traders are net short hints, prices may continue to rise. Having said that, recent sentiments warn that the Dow could fall ahead.

Technical Analysis

From a technical standpoint, the Dow Jones futures continue to consolidate slightly less than the 61.8% Fibonacci extension at 34269. A lower turn would put the focus on the 20-day Simple Moving Average and the midpoint of the extension at 33552. Take this those then exhibit growing support from March 2020. This could still support the dominant upper focus in the event of an imminent reversal.

Daily Chart of Future Dow Jones

Diagram Created in Business View

S&P 500 Sentiment Outlook – Neutral

La IGCS gauge implies that about 32% of retail investors net the S&P 500. Top exposure increased by 3.65% compared to yesterday but also decreased by 3.27% compared to a week ago. The fact that traders are still short suggests that prices will continue to rise. But the combination of this and recent changes in sentiment points to a neutral outlook for the index.

Technical Analysis

From a technical point of view, the S&P 500 faces a ‘neutral’Doji‘candelabra pattern. When this appears within a low or low trend, it could allude to a turning point. But, this does not always happen. Confirmation is key. A further disadvantageous closure could confirm the Doji, opening the door to a lower turn. That would put the focus on the 20-day SMA and growing support from March 2020. Negative RSI divergence also shows that upward momentum is disappearing, which can sometimes advance lower.

S&P 500 Futures Daily Chart

Diagram Created in Business View

* IG Clients and Position Data Used from April 27thth Report

— Written by Daniel Dubrovsky, Strategist by DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter