After the worst December seen since 1929, the January 2019 equity market has started off on a strong footing, with most major indices gaining an average of between 7% and 9%. Now, with the bullish sentiment strong and the market seemingly discounting no Federal Reserve interest rate increases for 2019, it may be wise to act with caution as complacency seems to be the order of the day. From an economic standpoint, the US economy remains stable, with employment growth, wage increases as well as GDP in positive territory. Could the market potentially be making an error in believing that we will see no interest rate increases and that the short term strength in equities in ‘certain’ to continue? As it is said, there is no such thing as ‘sure thing’ in markets and on that basis, I am looking at two contrarian technical trading opportunities.
#1. S&P500 Futures
Key Technical Drivers:
– Candle structure weakening (momentum slowing on lower time frames)
– RSI nearing overbought levels
– Momentum Indicator pointing lower while price makes new (recent) highs
Short/Sell S&P500 Futures at 2707