S&P 500 Trader Sentiment Warns of a Reversal

S&P500 Retail Trader Sentiment

Net-Long Positions Increase Nearly 20% Since Last Week

US 500: Retail trader data shows 32.3% of traders are net-long with the ratio of traders short to long at 2.1 to 1. In fact, traders have remained net-short since May 03 when US 500 traded near 2674.41; price has moved 7.4% higher since then. The percentage of traders net-long is now its highest since Aug 20 when US 500 traded near 2855.75. The number of traders net-long is 4.3% higher than yesterday and 19.0% higher from last week, while the number of traders net-short is 1.0% lower than yesterday and 3.9% lower from last week.

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S&P 500 Bearish Bias Emerges as Net-Short Traders Decrease

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current US 500 price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Jack Schwarze, DailyFX Research

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