U.S Equities: Retail Traders’ Purchases Ahead of the US CPI Report Put Pressure on the S&P 500 and Dow Jones

Oct 12, 2022
VOT Research Desk

Market Insights & Analysis

S&P 500, Retail trader positioning, technical analysis,  DOW and Wall Street update from VOT

Despite stock losses, retail traders continue to invest in Wall Street

Wall Street has been feeling bad these past few days, which has caused the S&P 500 and Dow Jones to fall. This comes before the highly anticipated US inflation report on Thursday. There is a possibility that hawkish expectations for the Federal Reserve will follow a positive outcome. That might not be a good sign for Wall Street in the future. Check out the recording of the webinar above for a comprehensive summary of this discussion!

Retail traders have continued to buy into the price action, defying the trend, despite recent stock losses. (VOT), which typically functions as a contrarian indicator, demonstrates this. In light of this, will traders’ increased desire to purchase the S&P 500 and Dow Jones in the coming sessions cause Wall Street problems?

The (VOT) gauge indicates that approximately 65 percent of retail traders are net-long in the S&P 500.Prices may continue to fall as a result of the majority of traders’ positive bias. This is because upside exposure increased by 5.22 percent and 13.31 percent, respectively, in comparison to yesterday and last week. With this in mind, a stronger bearish contrarian trading bias is provided by the combination of current and recent positioning changes.

The S&P 500 remains idle above September 2020 highs on the daily chart. Between 3541 and 3587, this creates a support inflection zone. A downtrend resumption may be possible if a confirmatory breakout occurs within this range. That reveals the Fibonacci extension at 3447, which is 61.8%. Otherwise, monitor the 20-day Simple Moving Average (SMA) closely as potential resistance prior to 3820 rising above.

DOW

About 58% of retail traders are net-long in the Dow Jones, according to the (VOT) gauge. This suggests that prices may continue to fall because the majority of investors are net-long. However, Dell’s upside exposure increased by 11.04 percent in comparison to yesterday and 8.71 percent in comparison to the previous week. A mixed contrarian bias in trading is produced as a result of the most recent shifts in exposure.

After recent losses, Dow Jones futures are above the October 3 low of 28635.The dominant downtrend pushed the pair lower while the 20-day SMA remained as resistance. The 61.8% and 78.6% Fibonacci extensions at 27945 and 27247 are respectively exposed by a confirmatory breakout under 28635.In any other case, getting past the 20-day SMA makes it possible to encounter key resistance at 30513.

S&P 500

Dow Jones Industrial Average