Post-Brexit Weekend Update And Top Current Holdings

There is no question that what we saw on Friday was a complete shock to the overall stock market. Despite what Monday-morning Quarterbacks were saying on Twitter, the market had absolutely priced in the possibility of a no vote at 100%. This is the very first stock market “black swan” event that I have ever been a part of that the overall market got completely wrong ahead of the event. Every other major disaster I have ever been a part of in my trading career from 1996 to now has come with a market already downtrending into the “black swan” event. The fact that the market can get something so wrong when it usually is the best at forecasting major world events is definitely a wake-up call to investors.

Now that the event has passed we have to take an honest look at the carnage left behind. When I do this objectively it becomes clear to me that the damage is severe and that the technical condition of this overall market has taken a drastic 180 degree turn. All of those well formed consolidation patterns that were forming out there and were giving a signal that this market was ready to rip higher have all been hit with price/volume moves on Friday that has either left them broken or on the brink of a breakdown. Very few sectors were left behind but there were a few like Utilies, REITs, and Metals that were spared.

There is no way to spin the action on Friday, on my end, other than partial shock. I am not shocked that there was a Brexit. When I first heard about this vote, I had a feeling that Leave would win. However, the market was telegraphing that my opinion was wrong and that a Remain vote was all but given. The book-makers, the pundits, and the market all got it wrong. Those that said they knew it, did not. You can not predict any event in the future. The market is the best at predicting the future but as we saw even it gets it wrong. This is why it is always operative to invest unemotionally with rules and to keep your risk profile always under watch.

1 2 3 4
View single page >> |

Disclosure: None

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.