S&P 500, DAX 30, FTSE 100 Outlook: Rising Long Bets Hint Prices May Turn Lower

By Daniel Dubrovsky2 days ago

S&P 500, DAX 30, FTSE 100, Technical Analysis, Retail Trader Positioning - Talking Points

  • Global stock markets fell on Tuesday, retail traders were quick to act
  • Rising long bets in the S&P 500, DAX 30 and FTSE 100 offer warning
  • Check out last week’s webinar recording to learn about retail positioning

Risk aversion struck financial markets over the past 24 hours, sending global stock markets lower. On Wall Street, the S&P 500 declined. Germany’s DAX 30 also weakened while the FTSE 100 dropped on the London Stock Exchange.

Retail traders were quick to act, taking up long positions in these markets, according to IG Client Sentiment (IGCS). IGCS is typically a contrarian indicator. For more analysis on this tool, check out last week’s webinar recording where I discussed how you can use IGCS in a trading strategy.

S&P 500 Sentiment Outlook - Bearish

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The IGCS gauge implies that about 38% of retail investors are net long the S&P 500. Upside exposure climbed by 8.81% and 16.63% over a daily and weekly basis respectively. Recent changes in sentiment warn that the current price trend may soon reverse lower despite the fact traders remain netshort.

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Technical Analysis

From a technical standpoint, the S&P 500 was already showing a sign of weakness in the form of negative RSI divergence. This highlighted that upside momentum was fading. Now, the 20-day Simple Moving Average (SMA) is in focus. A break under opens the door to facing rising support from March 2020.

S&P 500 Futures Daily Chart

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