Is a remain vote priced in?

US equity indexes closed moderately mixed, sp +5pts @ 2088. The two leaders - Trans/R2K, both settled lower by -0.3%. VIX settled +0.6% @ 18.48. Near term outlook offers a push to the gap zone of 2109/15. Clearly, what happens on Friday/Monday, will be greatly dependent upon the voting maniacs in the UK.


sp'daily5

VIX'daily3

Summary

A second consecutive net daily gain, the best run in a few weeks.

It is VERY notable that the daily bollinger bands are becoming super tight.. currently 2121-2063.

A big move is coming, as many others have noted in the past few weeks.

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The bigger weekly cycle...  sp'weekly1b

It remains the case that underlying price momentum continues to swing back toward the equity bears. In theory, unless there is a dramatic move to new historic highs (>2134) in the near term, the market is headed strongly lower, with first target of the lower bollinger band - currently @ 1916.. and rising.
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Is a 'remain' outcome priced in?

I do keep an eye on the cheerleaders of clown finance TV, and as I didn't have them on mute this lunch time, I did notice Josh Brown suggest that a 'remain' vote has arguably been priced into the market. Mr B added that the market wouldn't see a '500pt Dow' move on a 'remain' outcome.

Its an interesting consideration. Certainly, most could agree the market is NOT pricing in a 'leave' vote, as we trade a mere 2% from historic highs.

Might we see the market roll lower on a remain vote? After all.. there is a laundry list of economic reasons why the market will be vulnerable this summer and into the autumn. Technically speaking, the market is vulnerable until it breaks an actual new historic high.. having been stuck for over a year.

Frankly, I will be glad for the market to move onto other issues... once the UK vote count has been announced.

Goodnight from London

Pre-vote bullish hysteria

US equity indexes closed broadly higher, sp +12pts @ 2083 (intra high 2100). The two leaders - Trans/R2K, both settled higher by 1.1%. VIX settled -5.4% @ 18.37 (intra low 16.59). Near term outlook threatens Tuesday morning upside - as Yellen is due before the US Senate, before some pre-vote cooling.


sp'daily5

VIX'daily3

Summary

So, Mr Market managed to run the sp'2085 short-stops, and teased the bull maniacs with a morning high at the 2100 threshold.

However, there was some distinct cooling into the close, and that made for some rather spiky daily candles.

Yellen is due tomorrow morning, which threatens another push higher, but considering the daily spiky candles... a push (if briefly) above 2100 will be difficult.


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BREXIT chatter from Mr Long with Mish




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How will the UK vote?

I don't know. No one knows. Anyone who says with confidence they know how the vote will go is either lying... or just deluded. What can be said though, the vote will likely be very close.

I can only imagine the frustration in one of the political camps, if the final vote is no more than 2-3% split.

My guess right now? Based on a number of factors, I'm leaning on a 'remain' vote. The example of the failed 2014 Scottish vote for independence, is testament that a majority of the UK populace broadly lean conservative.

If instead the UK vote to leave... then markets are currently grossly mispriced. We shall soon find out... almost certainly before the Friday close.

Goodnight from London

Weekend update - US weekly indexes

It was a broadly bearish week for US equity indexes, with net weekly declines ranging from -2.2% (Transports), -1.2% (sp'500), to -0.9% (NYSE comp'). Near term outlook offers weakness of at least 3-4%, possibly double that.. if the UK decide to break away from the EU.


Lets take our regular look at six of the main US indexes

sp'500

A net weekly decline of -24pts (1.2%), with an intra low of 2050, and settling @ 2071. Underlying MACD (blue bar histogram) cycle ticked lower for a second week. At the current of decline, a bearish cross is due before end month.

There are a truckload of aspects of support from the 2030s to the psy' level of 2K. The April low of 2025 is arguably the most important. Any daily close <2025, will open the fire exit door to a swift move to the 1950/00 zone.

Best guess: A test of the sp'2025 low looks due within the next 3-6 trading days. If the UK vote to leave the EU - which appears increasingly probable, then world capital markets will be rocked.

However, it should be clear.. if the UK vote to remain, and the market does not break under 2025 before end June, it would bode for a massive bullish breakout, with new historic highs (in the leading indexes) no later than end July.

Considering the price structure of other world equity markets, the economic fundamentals, and the fact that low rates/NIRP is destroying the financial sector (dare I cite Deutsche Bank?), I remain leaning bearish.
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Nasdaq comp'

The tech declined by -1.9%, settling quad-opex at the 4800 threshold. The giant psy' level of 5K remains massive resistance. Underlying MACD cycle is set to turn negative before end month. First downside is the 4500/400 zone. A break under the Feb' low of 4209 looks viable in July.


Dow

The mighty Dow settled the week -1.1% @ 17675. 18K remains core resistance. First support is 17k. If that fails to hold in the near term... next support will be 16500/400. The Aug' 2015 low of 15370 will be a key target if June ends on a bearish note.


NYSE comp'

The master index settled -0.9% @ 10347, still a clear 3% above the psy level of 10K. If 10K fails to hold, next support is around 9500... 8% below current levels, and that would equate to around sp'1920


R2K

The second market leader - R2K, settled -1.6% @ 1144. The R2K is holding rising trend. However, if lost, first support will be the 1100/1085 zone. Underlying MACD cycle has a clear divergent lower cycle high. At the current rate of decline, there will be a bearish cross in around 3 weeks. The Feb' low of 943 is a long way down... and looks out of range until Aug/Sept'.


Trans

The 'old leader', is leading the way lower, settling -2.2% @ 7589. Key resistance remains around 8K. Underlying MACD cycle ticked lower for an eighth consecutive week, with the tranny set to see a bearish cross at next Monday's open. First key downside target is the Jan' low of 6403, and that is a very significant 15% to the downside.
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Summary

A broadly bearish week for US equities.

It is notable there is a clear divergent lower MACD cycle high - as had been expected, with all US indexes set for a bearish cross on the bigger weekly cycles within 1-3 weeks. By definition, that is suggestive of a near term VERY significant drop.. on the order of Aug'2015, or Jan'2016.

As many recognise, a very big move is coming. Either bulls are going to hold things together.. and push higher into July, or the bears are going to break back into the sp'1900s.

With 9 trading days left of June, the monthly close will likely determine how we broadly trade for the rest of the year.
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Looking ahead

An exceptionally important week is ahead

M - -
T - Yellen - testimony to the US Senate
W - EIA report, existing home sales, Yellen - testimony to the US congress
T - weekly jobs, PMI manu', leading indicators, New home sales

**The UK referendum to remain... or leave the EU**

The polls close Thursday @ 10pm BST (5pm EST). The result will likely become clear during the Friday US trading session, but quite possibly AFTER the EU/UK markets close on Friday at 4.30pm BST (11.30am EST)

F - Durable Goods Orders, consumer sent'.
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Have a good weekend
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