(MENAFN – DailyFX) Dow Jones Price Outlook: Wednesday’s recovery rally did little to convince retail clients of a sustained follow-through as they looked to short the Dow Jones Despite bullish price action, the Industrial Average remains off -1.15% for the week Find out how to use IG Client Sentiment Data with one of our Live Sentiment Data Walkthroughs
Dow Jones Price Outlook: Retail Traders Conflicted as Index Rebounds After a rocky start to the week, US equites have mounted a recovery effort. As of Wednesday’s close, the Dow Jones trades -1.15% lower than it opened, compared to the S & P 500 and Nasdaq 100 which trade -1.05% and -1.10% beneath their close last Friday. That said, retail traders have wavered in their positioning on the Dow Jones, whereas sentiment for the S & P 500 has decidedly pessimistic.
For the first time since early January, IG clients were net-long the Dow Jones on Monday – suggesting some traders were optimistic the index’s descent was over or that trader’s targets were hit. Either way, the optimism didn’t last long as shorts came raging back. While we at DailyFX typically view client positioning as a contrarian indicator, the current signal is relatively unclear. That said, traders are much more certain the S & P 500 will continue to lose ground.
View A Brief History of Trade Wars to read about the precedents set in prior economic conflicts.
Despite facing many of the same themes, client positioning on the S & P 500 reveals that traders are overwhelmingly short the index – even amid its 13.5% gain in the year-to-date. Given the conflicting signals from IGCS, traders must look to other tools like technical and fundamental analysis to assist in their decision making.
Dow Jones Price Chart: 1 – Hour Time Frame