Brexit status review

Brexit has made for some market excitement, so perhaps it’s time to review some charts. The major breakdown that that I anticipated (and still seems inevitable to me) has not transpired yet. Instead, the markets have settled into a sideways pattern over the last couple years. Today’s bloodbath doesn’t really change anything. American markets are near highs with plenty of room to fall before encountering meaningful support.

Here is what the S&P SPY looks like:

2016-06-24-SPY_CHARTS

Here is what the Nasdaq QQQ looks like. It may be forming a head & shoulder pattern:

2016-06-24-QQQ_CHARTS

International markets are in much worse shape, but the VEU ETF (global equity) is still well above channel support.

2016-06-24-VEU_CHARTS

The gold miner breakout that I’ve been tracking for awhile continues unabated. I have no sense for where a top might be. I have expected a pullback on a few different occasions, but so far no shakeout has lasted more than a few days. Gold looks to have broken out solidly from a bullish wedge.

2016-06-24-GLD_CHARTS

GDX and GDXJ were beaten much more savagely in recent years, and the breakout has reflected that oversold condition. Neither GDX nor GDXJ has even reached the 23% Fibonacci retracement from 2010 highs! Despite a 100%+ gain from this year’s lows, there still appears to be plenty of upside in the longer term.

2016-06-24-GDX_CHARTS

Though I seldom consider fundamentals in my trading analysis, I do think the continued ZIRP and push towards NIRP provides continued support for gold prices. The punishment for holding gold (no interest return) is a nonfactor, and gold feels like a much ‘safer’ holding to me than the digital or paper cash offered by banks. NIRP is, imho, a very real potential driver for gold prices.

That’s a rough overview of the way I see things right now. Gold or gold miners remain a hold or buy in my view. I would prefer to buy on a big pullback, but I don’t have a sense for when that might occur. I think markets will trend down, but I don’t think Brexit is any kind of singular catalyst for collapse. I will sit up and take notice when this sideways channel that dominates (American) markets is broken – either to the upside or downside.

 

 

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  1. Draft
    July 1, 2016 at 11:24 pm

    Hmm…it turned around pretty quickly this week.

    • July 5, 2016 at 12:38 pm

      Sure did. We’ll see where it goes from here. It just rallied back toward the top of the range (a lower high). More nothingness from equities. Gold & Silver, however, continue to surge.

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