With stock-index futures higher early Tuesday it seems that so far President Trump’s policy decisions have brought little or no surprise to markets, and have arguably added to recent upward momentum in U.S. equities, according to Longview Economics.
However, in a trading recommendation published Tuesday, Longview notes that many of the short-term measures it observes, such as its risk appetite models and put/call ratios, “highlight signs of near term frothiness and complacency.”
In addition. S&P500 futures sit close to key resistance levels, i.e. towards the top of their recent trading range, as the chart below shows.
“Initial resistance is just above current levels at around 6,052 (intra-day highs from last Friday, early January, and mid-November). Above that the next key resistance level is at 6,100 (highs from early and late December),” says Longview
“The case for moving short is building,” they say.
Still, Longview recognizes selling the current maket may be dangerous. “Risks, as always, are multiple and include the potential for (market positive) policy surprises from the White House. It’s also possible that, having consolidated recent gains, the uptrend in US equities is now resuming,” they say.