S&P 500, DAX 30, FTSE 100 Outlook: Rising Long Bets Hint Prices May Turn Lower

• Global stock markets fell on Tuesday, retail traders were quick to act

• Rising long bets in the S&P 500, DAX 30 and FTSE 100 offer warning

• Check out last weeks webinar recording to learn about retail positioning

Risk aversion struck financial markets over the past 24 hours, sending global stock markets lower. On Wall Street, the S&P 500 declined. Germanys DAX 30 also weakened while the FTSE 100 dropped on the London Stock Exchange.

Retail traders were quick to act, taking up long positions in these markets, according to IG Client Sentiment (IGCS). IGCS is typically a contrarian indicator. For more analysis on this tool, check out last weeks webinar recording where I discussed how you can use IGCS in a trading strategy.

From a technical standpoint, the S&P 500 was already showing a sign of weakness in the form of negative RSI divergence. This highlighted that upside momentum was fading. Now, the 20-day Simple Moving Average (SMA) is in focus. A break under opens the door to facing rising support from March 2020.

The DAX closed under the near-term 20-day SMA, exposing the 50-day line below it. This may have opened the door to extending Aprils top. Having said that, rising support from November appears to be maintaining the medium-term upside focus. Closing under the 50-day SMA exposes this trendline.

DAX DAILY CHART

TECHNICAL ANALYSIS

The FTSE 100 is struggling to pierce through the critical 6964 – 7039 resistance zone. Still, the 20-day SMA is appearing to maintain the upside bias. A break under it would then expose the 50-day line. Similar to the DAX, rising support from November could still maintain the medium-term upside focus.

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