Thursday, June 23, 2016

Brexit fallout watch

Well, my Bremain call didn't go so well (see Positioning for a Bremain result). As I write this, the BBC has called the referendum in favor of Leave by a margin of 52-48. GBPUSD is down about 10% and Asian stock markets are down 2-4%.

If you were correctly positioned for this outcome, congratulations, but don`t get overly excited about doing a victory lap as there is going to be market volatility ahead. During these episodes of unexpected market shocks, here is what I am watching for:
  • Technical: Watch for logical areas of technical support
  • Sentiment: Signs of panic and oversold reading that signal a bottom
  • Macro: Either official intervention or policy responses that could rip a short`s face off
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