Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

S&P 500, Dow Jones, DAX 40 Outlook: Retail Traders Buy Dips, is this a Warning?

Retail traders are increasingly betting up key global benchmark stock indices

Source: Bloomberg

Retail traders are increasingly betting the equities may rally in the near term, according to IG Client Sentiment (IGCS). Upside exposure is on the rise in the S&P 500, Dow Jones and the DAX 40. At times, IGCS can work as a contrarian indicator. If this dynamic continues, then these benchmark stock indices risk succumbing to additional selling pressure.

S&P 500 Sentiment Outlook - Bearish

The IGCS gauge shows that about 69% of retail traders are net-long the S&P 500. Since most investors are now net-long, this hints prices may continue falling. Upside exposure has increased by 6.72% and 9.57% compared to yesterday and last week respectively. With that in mind, the combination of current and recent shifts in positioning are offering a bearish contrarian trading bias for the S&P 500.

US 500 Client Positioning Source: DailyFX
US 500 Client Positioning Source: DailyFX

S&P 500 Futures Daily Chart

S&P 500 futures may be increasingly at risk of extending losses. A bearish crossover between the 20- and 50-day Simple Moving Averages (SMAs) emerged recently. Prices have also confirmed a breakout under the long-term 200-day SMA. Immediate support appears to be the 4224 – 4258 inflection zone. Falling under exposes the June low at 4126 before facing the May swing low at 4029. In the event of a turn higher, keep a close eye on the near-term SMAs for key resistance points.

S&P 500 Futures Source: TradingView
S&P 500 Futures Source: TradingView

Dow Jones Sentiment Outlook - Bearish

The IGCS gauge shows that about 62% of retail traders are net-long the Dow Jones. Since the majority of traders are now net-long, this hints prices may continue falling. Upside exposure has increased by 0.66% and 9.50% compared to yesterday and last week respectively. With that in mind, the combination of current and recent shifts in positioning are offering a bearish contrarian trading bias for the Dow Jones.

Wall Street Client Positioning Source: DailyFX
Wall Street Client Positioning Source: DailyFX

Dow Jones Futures Daily Chart

Dow Jones futures have extended losses after breaking under a bearish Rising Wedge chart formation. Prices have also confirmed a drop through the 200-day SMA, opening the door to a bearish technical bias. Immediate support appears to be the 33383 – 33623 inflection zone before facing the June low at 32902. Falling under the latter exposes the late March 2021 low at 31951. Pushing back above the 200-day SMA may open the door to testing the 38.2% Fibonacci retracement at 35330.

Dow Jones Futures Source: TradingView
Dow Jones Futures Source: TradingView

DAX 40 Sentiment Outlook - Bearish

The IGCS gauge shows that about 66% of retail traders are net-long the DAX 40. Since the majority of traders are net-long, this suggests prices may continue falling. This is as upside exposure increased by 2.35% and 19.59% compared to yesterday and last week respectively. With that in mind, the combination of overall and recent changes in positioning are offering a bearish-contrarian trading bias for the DAX 40.

Germany 40 Client Positioning Source: DailyFX
Germany 40 Client Positioning Source: DailyFX

DAX 40 Daily Chart

Following recent losses, the DAX 40 finds itself sitting on the edge of the familiar 14804 – 15048 inflection zone that has its beginnings from March 2021. Breaking under this floor may open the door to extending losses towards the late March low at 14422 before facing the 14131 inflection point. Still, positive RSI divergence does show that downside momentum is fading. That can at times precede a turn higher. Reversing to the upside would place the focus on the 16030 – 16265 resistance zone.

Dax 40 Daily Chart Source: TradingView
Dax 40 Daily Chart Source: TradingView

*IG Client Sentiment Charts and Positioning Data Used from January 25th Report


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.