On Tuesday morning, stock-index futures were slightly higher, indicating that President Trump’s policy decisions haven’t exactly rattled the markets. In fact, according to Longview Economics, these decisions may have even contributed to the recent upward momentum in U.S. equities.
Yet, in their trading advisory released the same day, Longview points out that several short-term measures, like their risk appetite models and put/call ratios, are showing signs of temporary exuberance and complacency.
Moreover, S&P 500 futures are nearing critical resistance levels, approaching the upper limits of their recent trading range, as depicted in the chart below.
“Initial resistance is just above the current levels, around 6,052,” referring to intra-day highs from last Friday, early January, and mid-November. “Beyond that, the next significant resistance level stands at 6,100, reflecting highs from early and late December,” Longview notes.
They further add, “The argument for shorting the market is gaining strength.”
Despite this, Longview acknowledges that offloading stocks right now might be risky. They caution, “There are always various risks at play, including the chance of market-positive policy surprises from the White House. Additionally, after consolidating recent gains, the uptrend in U.S. equities might just be picking up again.”
