Oct 5
VOT Research Desk
Key News – Insights and Analysis
Optimism and Direction – What is Next?
Wall Street saw its best two-day gain since April 2020 Retail traders have been selling the Dow Jones, S&P 500. In the two days since April 2020, Dow Jones futures have risen by 5.43 percent, which is the most aggressive move since April 2020.S&P 500 futures, on the other hand, rose 5.6% during the same time period.
Following a larger-than-anticipated decline in US job openings, traders decreased their hawkish expectations for Federal Reserve monetary policy. Retail businesses have responded, but not in the way you might expect.
On Wall Street, traders have been increasing their short exposure, it usually works as a contrarian indicator. Given this, could stocks experience further gains in the future? About 53% of retail traders are net-long the Dow Jones. This suggests that prices may continue to fall because the majority of traders continue to be bullish.
However, short exposure increased by 18.67% and 64.94%, respectively, in comparison to yesterday and the previous week. Prices may reverse course and rise as a result of these recent positioning shifts.
The Bullish Engulfing candlestick pattern was confirmed by Dow Jones futures. This has made it possible for the recent gains to continue. However, despite the impressive rally, the Dow Jones has yet to test the 20-day Simple Moving Average in the near future.
This may reestablish the negative focus. If not, the 50-day line will become visible. In general, the downside bias is being maintained by the falling zone of resistance from the end of last year. This indicates that the bearish bias can be overcome without necessarily leading to recovery. Net-long positions in the S&P 500 are held by 57% of retail traders.
This suggests that prices may continue to fall because the majority of traders remain long. However, compared to yesterday and the previous week, downside exposure increased by 11.88% and 17.09%, respectively.
Prices may soon reverse their recent positioning shifts and increase. The S&P 500 has confirmed a Bullish Engulfing candlestick pattern, just like the Dow Jones. This could lead to additional benefits. Prices have not moved above the 20-day SMA. If a breakout is confirmed above it, the upward push could be extended. Nevertheless, the broader downside bias is being maintained by the falling trend line from the beginning of this year. As a result, the bearish bias can be overcome without necessarily leading to recovery.
