IMPORTANT BREXIT UPDATE and BROAD STOCK MARKET & CRUDE OIL TRADE ALERT (6:30 pm EDT)
It appears that the polls on the Brexit vote are now leaning in favor of the U.K. staying in the European Union, and equity markets today reflected this sentiment by rallying strongly. The NASDAQ made a new weekly high today so the intermarket bearish divergence signal I mentioned in yesterday's blog is now negated. We shorted the broad stock market on June 8, and after falling for most of last week, it is now back up to our entry point. Considering the likelihood of a "remain in the EU" vote, I am going to cover my short position in the broad stock market (i.e. place a sell order now for tomorrow's market open) with little or no loss (depending on how the market opens tomorrow). Of course, the polls may be wrong, and if the "Brexit" passes we could see equity markets plummet. We will deal with that situation if it arises, but for now I think it is safer to be on the sidelines until this Brexit storm passes. Out of the broad stock market as of tomorrow morning.
In yesterday's blog I suggested a stop loss for our short position in crude oil "somewhere above $49". Today crude prices closed just above $50. A "Bremain" (remain in the EU) vote could also propel crude prices higher so if any trader is still holding a short position in crude, it would be prudent to cover that position now. If the June 17 low of $46.40 (August contract chart) was the bottom of the recent medium-term cycle (and start of a new one), this market could turn bullish, and we may start looking for a point to go long in crude. A break above the recent high of $52.28 would make that scenario more likely. Out of crude oil for now.
It is hard to say how gold and silver will react to the U.K.'s Brexit voting. A vote to leave the EU would almost certainly weaken the euro currency and propel the U.S. dollar higher. Under normal circumstances this would put downward pressure on the precious metals, but if investors fear a collapse in global equity markets they may run to gold and silver as a safe haven. In this situation we could see gold and the dollar rise at the same time. If Britain stays in the EU, the euro could rally (it rose sharply today on news of the new poll figures favoring a "Bremain") and push the dollar down, but this could be just a short-term "relief" reaction. The U.S. Dollar Index has been falling, but it is back to a very strong support level around 92 -93 so it could turn back up here. (A clear break below 92, however, would be a serious bearish development for the dollar). We are now entering another reversal zone for gold and silver (it is strongest next Tuesday/Wednesday), and there is good chance these precious metals will make a significant reversal over the next several days. Both metals have been falling (especially gold) so that reversal should be to the upside. I am tempted to go long in gold now, but the Brexit voting may create some wild short-term price swings in both directions so I am going to remain on the sidelines for now. We will watch carefully how prices move as we approach the center (next Tuesday/Wednesday) of this current reversal zone. On the sidelines of gold and silver.
It appears that the polls on the Brexit vote are now leaning in favor of the U.K. staying in the European Union, and equity markets today reflected this sentiment by rallying strongly. The NASDAQ made a new weekly high today so the intermarket bearish divergence signal I mentioned in yesterday's blog is now negated. We shorted the broad stock market on June 8, and after falling for most of last week, it is now back up to our entry point. Considering the likelihood of a "remain in the EU" vote, I am going to cover my short position in the broad stock market (i.e. place a sell order now for tomorrow's market open) with little or no loss (depending on how the market opens tomorrow). Of course, the polls may be wrong, and if the "Brexit" passes we could see equity markets plummet. We will deal with that situation if it arises, but for now I think it is safer to be on the sidelines until this Brexit storm passes. Out of the broad stock market as of tomorrow morning.
In yesterday's blog I suggested a stop loss for our short position in crude oil "somewhere above $49". Today crude prices closed just above $50. A "Bremain" (remain in the EU) vote could also propel crude prices higher so if any trader is still holding a short position in crude, it would be prudent to cover that position now. If the June 17 low of $46.40 (August contract chart) was the bottom of the recent medium-term cycle (and start of a new one), this market could turn bullish, and we may start looking for a point to go long in crude. A break above the recent high of $52.28 would make that scenario more likely. Out of crude oil for now.
It is hard to say how gold and silver will react to the U.K.'s Brexit voting. A vote to leave the EU would almost certainly weaken the euro currency and propel the U.S. dollar higher. Under normal circumstances this would put downward pressure on the precious metals, but if investors fear a collapse in global equity markets they may run to gold and silver as a safe haven. In this situation we could see gold and the dollar rise at the same time. If Britain stays in the EU, the euro could rally (it rose sharply today on news of the new poll figures favoring a "Bremain") and push the dollar down, but this could be just a short-term "relief" reaction. The U.S. Dollar Index has been falling, but it is back to a very strong support level around 92 -93 so it could turn back up here. (A clear break below 92, however, would be a serious bearish development for the dollar). We are now entering another reversal zone for gold and silver (it is strongest next Tuesday/Wednesday), and there is good chance these precious metals will make a significant reversal over the next several days. Both metals have been falling (especially gold) so that reversal should be to the upside. I am tempted to go long in gold now, but the Brexit voting may create some wild short-term price swings in both directions so I am going to remain on the sidelines for now. We will watch carefully how prices move as we approach the center (next Tuesday/Wednesday) of this current reversal zone. On the sidelines of gold and silver.
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