S&P 500 Rallies at Risk due to Clear Turn in Sentiment

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ssi_SPX500_body_Picture_16.png, S&P 500 Rallies at Risk due to Clear Turn in Sentiment

SPX500Retail CFD speculators remain incredibly short the SPX500 contract, which tracks the fair value of the S&P 500 E-mini Futures price. This would normally leave us bullish, but a recent shift in sentiment serves as early warning of a short-term turnaround.

Trade Implications SPX 500 There are currently almost 4 retail traders short the SPX500 for every one that is long, which would normally give us contrarian signal that the contract would likely continue higher. Yet this is an important moderation from last week, and key signs of divergence and cyclical turnaround in stocks suggest this is the start of a near-term reversal.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

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