Will Brexit cause cancer?

Will Brexit cause cancer?

I had more or less pledged not to discuss the childish level of ‘debate’ surrounding Brexit that politicians are spouting.  But this one really caught my eye for sheer chutzpah – and ignorance.  Cameron claims that a vote for Brexit would doom the UK to a weaker pound among other disasters – and lead to a huge hike in inflation for consumers.

Maybe he should have had a quiet word with the UK Treasury, because that is precisely what they have been praying for for the past several years.  Did Cameron know this? The BoE has had their 2% target in place since I was a boy it seems, and yet inflation has been on the floor for most of that time.  It has been missed by such a wide margin for years that another huge miss goes unnoticed.

So, if anything, the Treasury should be backing Brexit, not pumping out Remain propaganda.

It would not surprise me if Cameron in a final act of desperation claims that voting for Brexit will cause cancer.  Surely, that is the next step.

He also said it would be ‘immoral’ to vote for Brexit.  For a politician to bring up the subject of morality – surely a subject they have such little familiarity with – they have really lost the plot.

And we still have four weeks of this to endure.  But we have the markets to keep us all sane.

Yesterday, stocks rallied hard – and headline writers had a real head-scratching task of coming up with the ‘reasons’.  Surely, with so many negative influences about, all they could come up with was the fact that crude oil did not plunge.  And they get paid for this?

Yes, my old friend crude oil has remained firm around the $50 level and is getting closer to my long-standing target at around $60.   I have noted many more disbelieving articles that conclude the rally must be over with the huge supply in the many huge tankers now sailing the seven seas like the Flying Dutchman – never to reach port.

But we all know that the fundamentals, such as supply data, is not what drives markets – at least not in the time scales where we can trade profitably.  I sense that bullish sentiment is pretty weak – and that is what gives me confidence in my bullish forecast.

And bullish sentiment in stocks has fallen recently along with the Dow/S&P and now with stocks in a sharp rally, shorts are being squeezed.

In my previous post, I showed the Russell 2000 index of low cap high-risk shares.  Here it is updated:

The market was then testing the upper blue tramline and this is what I wrote: “A clear break above it would herald a further rally and that could occur early next week.”

Sad to say, I was totally wrong – the break occurred yesterday instead.  And what a break.  Remember, tramline breaks are tradeable events and a long position was indicated at my red arrow.

As I write, it has hit the Fibonacci 78% resistance level where short term profits can be taken.

And here is the more sober Dow:

The sharp rally has carried to the Fibonacci 62% level after breaking my upper tramline. I had thought that that target would be reached early next week as well.

What a shock to the bears!  Of course, many traders are gearing up for the ‘important’ US GDP data due out on Friday and the strength of the rally has certainly revealed just how short the market is/was.

But this action was foretold by the lovely tramline overshoot at the C wave low.  I treat overshoots very seriously as they often herald sharp reversals.  It is as if the brief move below the solid tramline takes out many ‘weak’ longs and sets the stage for a rally devoid of many of these weak longs who would be taking profits (selling) on the way up.  In other words, the overshoot has got rid of a potential source of selling.  The normal buying pressure would then carry on with little resistance.

All of this action has given me more confidence that we shall see new all-time highs in the Dow/S&P – but probably not in the Nasdaq.


The VIP Club is now long Dow/S&P.

Select your currency
GBP Pound sterling