In these pages, I usually obey the unwritten rule when in a pub – no politics. But the Brexit so-called ‘debate’ that will surely impact markets (if it hasn’t already started doing so) will be my exception that breaks the rule.
On any reasonably impartial stance, the Vote Remain camp has a major problem. The extremes of apocalyptic warnings issuing from domestic politicians and others has been taken to a new level by the international establishment. Even Obama got in his two cents worth.
The normally unemotional AEP has even dared to lambast Largarde of the IMF for pushing her nose in where it is not wanted (“IMF meddling in Brexit is scandalous skullduggery“).
As a contrarian, this is all very interesting. The establishment is clearly ganging up to remain in the EU, and this can only mean one thing: sentiment is reaching peak Remain and the market for Remain is heading down! And the polls are saying just that with the Leave survey results gaining on the Remain. It could be a great short!
The degree of alarmism used by these characters is breathtaking with their outlandish claims of the economic damage for an exit being touted in order to scare the public into voting their way.
This is totally understandable of course because their careers on the gravy train depend on maintaining the status quo.
This is all reminiscent of the on-going Climate Change so-called ‘debate’ where alarmism has been rife for years. There were disaster scenarios taken seriously by politicians (because it aided their careers, of course) that have been proven wrong.
The wholesale adoption of the theory of man-made climate change by the political classes has resulted in another gravy train for those scientists who sell his/her scientific soul to the devil of funding. The fact that earth’s temperature has flat-lined in almost 20 years – despite all of the ‘evil’ carbon dioxide produced (mainly by China and India) has not been accounted for by any computer model the ‘scientists’ cling to – has not fazed them.
But I sense a light-bulb moment approaches in society’s attitude to their lords and masters. And that will have a big impact on the markets.
The public do not buy the global warming/climate change alarmist scams with attitude surveys putting this way down in their list of concerns of the future.
The establishment’s bully-boy schoolyard alarmist tactics over Brexit may well backfire on them (results tba June 24). Actually, I believe the result will hinge on matters such as the economy and immigration.
Also, faith in the ability of central banks to control economies is also being eroded. With all of the QE/ZIRP/NIRP money-printing for the past eight years, major economies have still not reached ‘lift-off’ and are in fact declining. The public (who have a lot more votes than the 1%) are waking up, and I smell change in the air.
And a change is what is required to get back to basics from the mess the politicos have produced. Negative interest rates? That has spawned some of the greatest asset bubbles in history. When they burst, it will be mayhem.
The Wheel of Fortune turns.
The Dow – is this a H&S reversal?
And with S&P P/E ratio at a stunningly bullish 24x, is the reversal at hand? Yesterday’s stock market action is almost certainly a straw in the wind with big losses late in the day. Incidentally, many bear raids are conducted late in Friday’s afternoon NY session when many traders have left for the beach/weekend and volumes are thinner.
But what’s this? Can this be a Head & Shoulders reversal being completed? Here is the daily showing action off the Feb lows
The tan line is the support line I had drawn in on Thursday which has three accurate touch points. Of course, the first warning that a reversal was possible is the momentum divergence going into the April high.
This tan line now has the potential to be the neckline of this pattern – to be confirmed by a solid daily close below the line (and that could happen early next week).
And if so, my major target is the 16,800 area. I base that on Fibonacci and a measured target from the H&S.
Of note is that on Thursday will be the anniversary of the all-time Dow high at 18,365. On April 20 it reached 18,167 – a mere 200 pips (or 1%) away. If this high holds, it will mark the top of a very large wave 2 and the market will be in a large wave 3 down.
That presents a stunning opportunity.
VIP Club members are already short from close to the 18,000 level.