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Dow Jones, S&P 500 Appear Exposed as Retailers Raise Upward Bets – By ASC


Dow Jones, S&P 500, Wall Street, Technical Analysis, Retailers’ Positions – Discussion Items

  • Retailers increased upside exposure on Wall Street
  • Is this a warning that the Dow Jones and S&P 500 may fall?
  • See footage of this week’s webinar for further analysis

The Dow Jones and S&P 500 have been targeting lower in recent weeks, in line with losses since taking the lead at the end of last year. Recent losses have been increasingly linked to traders re-trying to increase their upside exposure on Wall Street. This can be measured using the IG Customer Sentiment (IGCS), which often acts as a contrarian indicator. If the trend in this position continues, will more severe pain occur for risk appetite?

Dow Jones Sentiment Review – declining

The IGCS gauge shows that about 63% of retailers are along the Dow Jones net. Given that the majority of traders are biased towards ascending, this suggests that prices may continue to fall. This is when the old exposure increased by 2.63% and 66.49% respectively compared to yesterday and last week. As such, this combination offers a stronger downward contrarian trading tendency.

Dow Jones Daily Chart

Dow Jones futures have extended losses over the past few trading sessions, bringing the price back to the support zone 32902 – 33623 after pushing the resistance of 35281. This also follows the pattern of the Bearish Engulfing candlestick chart. A break below that zone will then focus on the March 2021 lows, making the support range between 31951 and 32235.

Dow Jones, S&P 500 Appear Exposed as Retailers Raise Upward Bets

Chart Created in Trade View

S&P 500 Sentiment Review – down

The IGCS gauge shows that about 62% of retailers are net of the S&P 500. Given that the majority is biased toward ascending, this suggests that prices may continue to fall. This is when the ascending exposure increased by 2.06% and 22.68% respectively compared to yesterday and last week. As such, this signal offers a stronger downward contrarian trading tendency.

Dow Jones, S&P 500 Appear Exposed as Retailers Raise Upward Bets

S&P 500 Daily Chart

The S&P 500 futures may be in the process of forming a bearish Head and Shoulders chart formation. The price is currently pressing the neckline and support zone 4101 – 4140. A lower break could open the door to extend losses towards the low of May 2021 at 4029. Beyond that is the 100% Fibonacci extension at 3924. Otherwise, immediate resistance could be a discrepancy zone 4224 – 4258.

Dow Jones, S&P 500 Appear Exposed as Retailers Raise Upward Bets

Chart Created in Trade View

*IG Customer Sentiment Chart and Position Data Available from 26 Aprilke Report

— Written by Daniel Dubrovsky, Strategist for DailyFX.com

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

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