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Dow Jones, S&P 500, NZD/USD Price Outlook Based on Retail Positioning

Dow Jones, S&P 500, NZD/USD, Trader Positioning – Talking Points

  • IG Client Sentiment hints Dow Jones may fall next
  • Will S&P 500 follow or continue setting new highs?
  • NZD/USD at risk to turning lower as long bets rise

In this week’s session on IG Client Sentiment (IGCS), I discussed the outlook for the Dow Jones, S&P 500 and NZD/USD. IGCS is a contrarian indicator. For a deeper dive into what this means and for fundamental analysis, check out the recording of the session above.

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Aug 26

( 00:08 GMT )

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Dow Jones Sentiment Outlook – Bearish

The IGCS gauge implies that about 34% of retail traders are net long the Dow. Upside exposure has increased by 5% and 46% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers abearish contrarian trading bias.

Dow Jones, S&P 500, NZD/USD Price Outlook Based on Retail Positioning

Dow Jones Technical Analysis

Dow Jones futures are idling just under the key 28084 – 28197 inflection zone. A turn lower from here places the focus on the 27312 – 27624 inflection range with key rising support from May sitting just below. The latter could reinstate the focus to the upside. A push above 28197 exposes early 2020 peaks.

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Dow Jones Futures – Daily Chart

Dow Jones, S&P 500, NZD/USD Price Outlook Based on Retail Positioning

Dow Jones Chart Created in Trading View

S&P 500 Sentiment Outlook – Bullish

The IGCS gauge implies that about 20% of retail traders are net long the S&P 500. Exposure to the upside has decreased by 5% and 10% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a bullish contrarian trading bias.

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Dow Jones, S&P 500, NZD/USD Price Outlook Based on Retail Positioning

S&P 500 Technical Analysis

S&P 500 futures closed at a record high over the past 24 hours, though remain under the all-time high set on February 20 which makes for key resistance at 3397. A push above this price exposes the midpoint of the Fibonacci extension at 3452. Otherwise, a turn lower places the focus on rising support from April.

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S&P 500 Futures – Daily Chart

Dow Jones, S&P 500, NZD/USD Price Outlook Based on Retail Positioning

S&P 500 Chart Created in Trading View

New Zealand Dollar Sentiment Outlook – Bearish

The IGCS gauge implies that roughly 47% of retail investors are net long NZD/USD. Upside exposure has increased by 10% and 4% from yesterday and last week respectively. The combination of current sentiment and recent changes offers a bearish contrarian trading bias.

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Dow Jones, S&P 500, NZD/USD Price Outlook Based on Retail Positioning

New Zealand Dollar Technical Analysis

NZD/USD may turn lower after prices took out rising support from March, yet follow-through has been somewhat lacking. The 50-day Simple Moving Average caught the pair as prices bounced off the 0.6503 – 0.6537 support zone. A close under the latter could open the door to extending losses.

NZD/USD – Daily Chart

Dow Jones, S&P 500, NZD/USD Price Outlook Based on Retail Positioning

NZD/USD Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from August 19th 00:05 GMT snapshot

— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

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