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FxWirePro: IG retail sentiment suggests further rise in S&P500

Retail clients data available from IG.com, which is UK-based Company, and leader in online broking, providing trading in financial derivatives such as contracts for difference and financial spread betting and, stockbroking to retail traders, strongly suggests that the U.S. benchmark stock index S&P500 is likely to rise further.

The S&P500 has been rising steadily after bottoming around 2430 (SPX500-CFD of S&P500) and currently trading at 2590 area. IG retail sentiment data, which is largely used as a contrarian indicator has been signaling further rise.

As per the data, retail traders have recently shifted from a net long to net short and currently, 66 percent retail positions are on the short side, while only 34 percent positions are on the long side, which strongly suggests further rise, as almost two retail positions are short for every one position. Last week there was every buy position for each selling position, and retail traders were net long before that by a double margin, in the week before.

However, we forecast a further continuation of the bear market, with 2250 area as the target for the PX500, but this is a medium-term outlook, and with retail traders net short on S&P500, the index might rise further in the short term. The Brexit voting outcome in the UK, which is expected to begin today at 19:00 GMT, would be a major factor in deciding the next move.

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