S&P 500, Dow Jones face bother as retailers purchase forward of US CPI report

S&P 500, Dow Jones, Retail Dealer Positioning, Technical Evaluation – IGCS Wall Road Replace

• Retail merchants proceed to purchase Wall Road regardless of inventory losses
• From a contrasting perspective, it could point out extra bother.
• Will S&P 500, Dow Jones fall as US CPI report attracts nearer?

In latest days, sentiment has been souring on Wall Road, sending the S&P 500 and the Dow Jones down. That is forward of Thursday’s much-anticipated US inflation report. One other tangible outcome might deliver with it expectations for the Federal Reserve. This will not be a great signal for Wall Road going ahead. For a full abstract of this dialogue, watch the webinar recording above!

Regardless of latest losses in shares, retail merchants proceed to purchase into value motion, opposite to the development. This may be seen by taking a look at IG Shopper Sentiment (IGCS), which acts as a distinction indicator. With that in thoughts, has this elevated the urge for food of merchants to purchase the S&P 500 and is the Dow Jones a nuisance for Wall Road within the coming classes?

S&P 500 Sentiment Outlook – Bearish

The IGCS gauge exhibits that roughly 65% ​​of outlets are net-long within the S&P 500. Since most merchants are bullish, this implies that the worth could proceed to say no. This stands as a rise of 5.22% and 13.31% respectively in comparison with yesterday and final week. With this in thoughts, the mixture of present and up to date modifications in positions offers buying and selling bias versus a powerful bearish one.

S&P 500 Every day Chart

On the each day chart, the S&P 500 stays dormant above the September 2020 excessive. This types an inflection zone of help between 3541 and 3587. A affirmation breakout below this vary might open the door for a resumption of the downtrend. This highlights the 61.8% Fibonacci extension at 3447. In any other case, hold a detailed eye on the 20-day easy transferring common (SMA) as resistance earlier than the 3820 kicks in.

Chart created in Buying and selling View

Dow Jones Sentiment Outlook – Combined

The IGCS gauge exhibits that round 58% of outlets are net-long within the Dow Jones. Since most traders are net-long, it alerts that the worth could proceed to say no. However, the upside publicity decreased by 11.04% in comparison with yesterday, in addition to a rise of 8.71% over the earlier week. Given the latest modifications in publicity, this creates a blended contrarian buying and selling bias.

dow jones each day chart

Dow Jones futures are above October 3 low of 28635 after latest losses. The 20-day SMA was positioned as resistance, guiding the pair to the underside with a serious downtrend. A confirmatory breakout below 28635 highlights 61.8% and 78.6% Fibonacci extensions at 27945 and 27247 respectively. In any other case, a clearing of the 20-day SMA opens the door to face main resistance at 30513.

Chart created in Buying and selling View

*IG consumer sentiment charts and positioning information used from the October eleventh report

— Written by Daniel Dubrovsky, strategist at DailyFX.com

To contact Daniel, use the remark part beneath or@ddubrovskyFXon twitter