CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

S&P 500, Dow Jones forecast: Wall Street indices may rise as retail traders sell

Retail traders shift back to selling the S&P 500 and Dow Jones, and both of the indices are nearing record highs and key resistance.

Taking a look at IG Client Sentiment (IGCS), retail investors are back to tending to sell the major benchmark stock indices on Wall Street. These include the US 500 and Dow Jones. IGCS tends to be a contrarian indicator. This means that if retail traders continue to sell into recent price action, there could be more room for these indices to extend gains.

S&P 500 sentiment outlook - Bullish

The IGCS gauge shows that roughly 45% of retail traders are net-long the S&P 500. Downside exposure decreased by 0.89% compared to yesterday while simultaneously increasing 14.74% compared to a week ago. Since the majority of traders are now net-short, this hints that prices may continue rising. Recent shifts in positioning are further underscoring a bullish contrarian trading bias.

Techincal analysis

S&P 500 futures extended an advance beyond a near-term falling trendline from early September. This has brought the index very close to the all-time high of 4549. This does mean that the S&P 500 may face key resistance in the coming days. This includes a former rising support line from March, which could establish itself as new resistance. A turn back lower, with confirmation, may place the focus on the September low at 4260. Otherwise, the 61.8% and 78.6% Fibonacci extensions sit at 4581 and 4668 respectively.

Dow Jones sentiment outlook - Bullish

The IGCS gauge implies that about 32% of retail traders are net-short the Dow Jones. Downside exposure increased by 0.85% and 37.48% over a daily and weekly basis respectively. Since the majority of retail traders are net-short, prices may continue rising. The recent changes in sentiment are further underscoring a bullish contrarian trading bias.

Technical anlysis

Recent gains in Dow Jones futures have brought the index just shy of the all-time high at 35547. This followed a bounce off the 33839 – 33383 support zone and the 200-period Simple Moving Average. A rejection of the all-time high may send prices lower towards the long-term SMA. Otherwise, a breakout higher with confirmation exposes the 100% and 123.6% Fibonacci extension levels at 36028 and 36652 respectively.

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products. ​

The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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