Selling SPX500 Akin to Jumping in Front of Freight Train
SPX500 –Retail CFD speculators are near their most net-short the SPX500 contract on record, and such incredibly one-sided sentiment suggests that selling at these levels is dangerous.
Trade Implications – Our retail sentiment data shows that the number of orders short SPX500 outnumber those long by an almost-unbelievable 10.6 to 1. Our data shows that such one-sided sentiment often comes at the top of the trend, but we can’t emphasize enough that THE extreme is only clear in hindsight.
As it stands we would equate getting short at these levels as roughly equivalent of jumping in front of a freight train.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
Download all of our Sentiment-based trading strategies free via an ongoing promo on FXCMApps.com
To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link.
View how to automate the high-volatility Breakout2 Trading System via our previous article and webinar recording.
Auto trade the trend reversal-trading Momentum2system via our previous article and webinar recording.
Trade with strong trends via our Momentum1 Trading System and view an archived webinar
Use our counter-trend Range2 Trading system and view an archived webinar guide on automation
New to FX markets? Learn more in our video trading guide.
Contact David via
Twitter at http://www.twitter.com/DRodriguezFX
Facebook at http://www.Facebook.com/DRodriguezFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
