I am going to sell both Dow futures (hopefully around 20,080) and S&P500 futures (at around 2,293). This new trade to be instigated at or near open on Monday 30 January and is based on my view and is not investment advice in any way. Please contact your financial advisor before investing. The reason for the trade is simple. Trump is smashing and trashing the US economy and soon, the US stock market will follow.

His extremist approach to policy settings, both on economic and social issues, has generated a huge discontent in the US that runs the risk of derailing the momentum in economic growth over the past year. Business and consumer sentiment, and with it investment and spending, does not usually react well to political upheaval and divisive policies. There is a very real risk that the likely fall in sentiment will upset the economy and market sentiment.

The trade is a little more digestible given the market is at record highs and while the old adage is that the trend is your friend, this approach is a proven loser when the trend changes, in this case from up to down. I reckon the trend is about to change.

Stop loss: Dow: 20,490,  S&P: 2,350.

Target: TBA

[UPDATE:   10.10am Monday 30 January:  Entry level a little less favourable than hoped:  Dow 20,045:  S&P500 2,288]

Note: this is just a personal view and everyone should contact their financial advisor before making any investment decision.

Written and contributed by Stephen Koukoulas, Managing Director of Market Economics. Originally  appeared here: (VIEW LINK)


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John Boardman

Looks like the stop loss on this one has been triggered with the Dow now over 20,600. Always a risky call to make an announcement to sell everything!