Jump to content

Dow Jones, S&P 500 Outlook: Will Wall Street Rally Resume as Retail Traders Sell?


Recommended Posts

S&P 500, DOW JONES, TECHNICAL ANALYSIS, RETAIL TRADER POSITIONING - TALKING POINTS

  • Retail traders aggressively sold recent gains on Wall Street
  • Does this hint the Dow Jones and S&P 500 could extend gains?
  • Both face key incoming resistance levels, will uptrend resume?
News updates from November 2: Dow Jones closes above 36,000, CDC backs  Covid vaccine for young children, US sues to block publisher mega-merger |  Financial Times

According to IG Client Sentiment (IGCS), retail investors are increasingly betting that equities may weaken in the near term. Downside exposure is on the rise in the Dow Jones and S&P 500. At times, IGCS can be a contrarian indicator. If this trend in positioning extends, then volatility on Wall Street could continue cooling ahead. Fur a further breakdown of this tool, which includes fundamental analysis, check out the recording of this week’s webinar above!

DOW JONES SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that 49.84% of retail traders are net-long the Dow Jones. Since the majority of traders are net-short, this suggests prices may continue rising. Upside exposure increased by 7.8% and 49.86% compared to yesterday and last week respectively. The combination of overall and recent changes in positioning are offering a bullish contrarian trading bias.

Dow Jones, S&P 500 Outlook: Will Wall Street Rally Resume as Retail Traders Sell?

DOW JONES FUTURES 4-HOUR CHART

On the 4-hour chart, Dow Jones futures are facing a combination of a near-term falling trendline from the beginning of January and the 61.8% Fibonacci retracement at 35380. This follows a bullish crossover between the 20- and 50-period Simple Moving Averages (SMAs). Breaking above key resistance could open the door to extending gains towards the January peak at 36832. Otherwise, a turn lower may place the focus back on the 33031 – 33613 support zone.

 

Dow Jones, S&P 500 Outlook: Will Wall Street Rally Resume as Retail Traders Sell?

Chart Created in Trading View

S&P 500 SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that roughly 58% of retail traders are net-long the S&P 500. Since the majority of traders are still biased to the upside, this suggests prices may fall. However, downside exposure increased by 14.91% and 44.52% respectively. The combination of overall and recent changes in retail trader positioning is offering a bullish contrarian bias.

Dow Jones, S&P 500 Outlook: Will Wall Street Rally Resume as Retail Traders Sell?

S&P 500 FUTURES 4-HOUR CHART

On the 4-hour chart, S&P 500 futures have cleared the midpoint of the Fibonacci retracement at 4510. That has exposed the 61.8% level at 4580 as well as a potential falling trendline from the beginning of January. A bullish crossover recently formed between the 20- and 50-period SMAs. This may hint at further gains. Clearing the 61.8% retracement as well as the potential trendline may open the door to extending gains towards the current 2022 peak at 4808. Otherwise, turning lower may see the 4212 – 4266 support zone come back into focus.

 

Dow Jones, S&P 500 Outlook: Will Wall Street Rally Resume as Retail Traders Sell?

Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from February 1st Report

 

Written by Daniel Dubrovsky, Strategist for DailyFX.com. 2nd Feb 2022

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Dear @Naren12166, Thank you for the post. Please note that we don't have a definite date but the product team is in the testing phase, a few countries should have Trading View soon. Thanks, KoketsoIG
    • TXN Elliott Wave Analysis Trading Lounge Daily Chart, Texas Instruments Inc., (TXN) Daily Chart TXN Elliott Wave Technical Analysis FUNCTION: Counter Trend MODE: Corrective STRUCTURE: Triangle POSITION: Wave {iv}. DIRECTION: Bottom in wave {iv}.   DETAILS: Looking for a triangle in wave {iv} of 3 as we have found resistance on TL2 at 200$.     TXN Elliott Wave Analysis Trading Lounge 4Hr Chart, Texas Instruments Inc., ( TXN) 4Hr Chart TXN Elliott Wave Technical Analysis FUNCTION: Counter Trend MODE: Corrective STRUCTURE: Triangle POSITION: Wave (e) of {iv}. DIRECTION: Bottom in (e).   DETAILS: Looking for wave (e) to be near completion to then resume higher and find support on top of 200$.   Welcome to our latest Elliott Wave analysis for Texas Instruments Inc. (TXN). This analysis provides an in-depth look at TXN's price movements using the Elliott Wave Theory, helping traders identify potential opportunities based on current trends and market structure. We will cover insights from both the daily and 4-hour charts to offer a comprehensive perspective on TXN's market behavior.   * TXN Elliott Wave Technical Analysis – Daily Chart* In our Elliott Wave analysis of Texas Instruments Inc. (TXN), we observe a counter-trend corrective pattern characterized by a triangle structure. TXN is currently positioned in wave {iv} of 3, suggesting a bottoming process in wave {iv}. The recent price action indicates that TXN has encountered resistance around the TL2 trendline at $200. This resistance could imply the formation of a triangle in wave {iv}, setting the stage for a potential resumption of the upward trend once the triangle completes. Traders should monitor the $200 level for signs of a breakout or further consolidation within the triangle.   *TXN Elliott Wave Technical Analysis – 4Hr Chart* On the 4-hour chart, TXN is following a counter-trend corrective mode within a triangle structure, specifically in wave (e) of {iv}. The current analysis suggests that wave (e) is nearing completion, which could signal the end of the triangle and the beginning of a move higher. The completion of wave (e) should ideally find support above the $200 level, aligning with the daily chart's indication of a possible upward resumption post-triangle. Traders should watch for the termination of wave (e) and the subsequent price action to confirm a bullish continuation.   Technical Analyst : Alessio Barretta Source : Tradinglounge.com get trial here!  
    • KOSPI Composite Elliott Wave Analysis KOSPI Composite Elliott Wave Technical Analysis - Daily Chart Function: Trend Mode: Impulsive Structure: Gray Wave 3 Position: Orange Wave 3 Direction Next Lower Degrees: Gray Wave 4 Details: Gray wave 2 appears completed. Now gray wave 3 of 3 is in play. Wave Cancel Invalid Level: 2636.93 The KOSPI Composite Elliott Wave analysis on the daily chart offers a detailed view of the market's trend and potential future movements based on Elliott Wave theory. This analysis identifies the primary function as a trend, indicating a directional market movement. The trend is described as impulsive, which in Elliott Wave terminology signifies a strong and dominant market movement in the direction of the primary trend. This impulsive nature is shown in the wave structure, identified as gray wave 3. Gray wave 3 is part of a larger sequence, crucial for understanding overall market momentum. Currently, the market is positioned in orange wave 3, within the larger gray wave 3 sequence. The third wave in Elliott Wave theory is often the most powerful and extended, suggesting significant market activity and price movement. The next lower degrees direction focuses on the development of gray wave 4. This implies that once gray wave 3 is completed, the market will transition into a corrective phase characterized by gray wave 4. This wave typically interrupts the impulsive trend temporarily before the market resumes its primary direction. Detailed observations indicate that gray wave 2 seems completed. The completion of gray wave 2 suggests the market has finished a corrective phase and has now transitioned into gray wave 3 of 3. This phase is significant because wave 3 of 3 often involves the strongest price movements within the impulsive sequence, indicating robust market momentum. An essential aspect of this analysis is the wave cancel invalid level, set at 2636.93. This level is a key threshold for validating the current wave count. If the market price exceeds this level, it would invalidate the existing wave structure, necessitating a reassessment of the Elliott Wave count and potentially altering the market outlook. Summary: The KOSPI Composite daily chart analysis indicates an impulsive trend within gray wave 3, currently positioned at orange wave 3. It suggests the completion of gray wave 2, with gray wave 3 of 3 now in play. The wave cancel invalid level at 2636.93 is critical for validating the current wave structure and guiding future market expectations.   KOSPI Composite Elliott Wave Technical Analysis - Weekly Chart Function: Trend Mode: Impulsive Structure: Orange Wave 3 Position: Navy Blue Wave 3 Direction Next Lower Degrees: Orange Wave 4 Details: Orange wave 2 appears completed. Now orange wave 3 of 3 is in play. Wave Cancel Invalid Level: 2551.31 The KOSPI Composite Elliott Wave analysis on the weekly chart offers a detailed perspective on the long-term market trend using Elliott Wave theory. This analysis identifies the primary function as a trend, indicating a directional market movement. The trend is described as impulsive, which in Elliott Wave terminology signifies a strong, dominant movement aligned with the primary market momentum. The structure of the market movement is identified as orange wave 3, suggesting the market is currently in the third wave of this sequence. In Elliott Wave theory, the third wave is often the most powerful and extended, indicating significant market activity and price progression. The current position within this structure is navy blue wave 3, implying that the market is advancing within a larger, overarching navy blue wave sequence. This signifies continued strong movement in the market. The analysis indicates that the market is expected to transition into orange wave 4 after completing the current wave. Orange wave 4 represents a corrective phase typically following the completion of an impulsive wave. This phase is essential for consolidating gains before potentially resuming the primary trend. Detailed observations highlight that orange wave 2 appears completed, suggesting the market has finished its corrective phase and is now transitioning into orange wave 3 of 3. This phase is crucial as wave 3 of 3 is generally associated with the strongest and most dynamic movements within the wave sequence, indicating robust market momentum. A critical aspect of this analysis is the wave cancel invalid level, set at 2551.31. This level acts as a threshold for validating the current wave count. If the market price exceeds this level, it would invalidate the existing wave structure, necessitating a reassessment of the Elliott Wave count and potentially altering the market outlook. Summary: The KOSPI Composite weekly chart analysis identifies an impulsive trend within orange wave 3, currently positioned at navy blue wave 3. The completion of orange wave 2 signals the beginning of orange wave 3 of 3. The wave cancel invalid level at 2551.31 is crucial for validating the current wave structure and guiding future market expectations.   Technical Analyst : Malik Awais Source : Tradinglounge.com get trial here!  
×
×
  • Create New...
us