Market Shrugs Off Brexit … For Now

ES_30Min_160630_EODThe market bounce after the steep fall post-Brexit vote has been sharp and swift. Usually market takes stairs to go up but takes elevator to go down. This time it seems that it is using elevator both ways. Based upon the disruption created by UK’s decision to leave EU everyone expected the markets to continue decline. So the V-shaped bounce of the market is confusing to many, but, as we noted on earlier, the technical damage was not significant, so it is not surprising the resumption of previous trend.

The market diary for Thursday 30th mentioned that the bias for the market is to the upside. We also noted critical support and resistance levels. The price action of S&P 500 agreed with our assessment. The support was never tested but both resistance levels were broken to the upside and the index closed at the high of day at 2098.80.

SPX_D_160630_EODThe daily chart shows that S&P 500 is close to it June 24th high of 2103.81.  If it break above that level then it will have very strong chance of testing the all time high of 2134.72 reached on May 20, 2015.

Other major US indices are also showing similar chart pattern and are near the June 24th high. For the day, Dow Jones Industrial Averages gained +1.33%, S&P 500 +1.36%, NASDAQ Composite +1.30%, Russell 200 +1.79% and Dow Transportation Averages gained +0.97%.

DJUBS_D_160630_EODAnother interesting chart is that of Bloomberg Commodity Index. Though it declined slightly for the day, it price action looks to be near-term bullish. This bodes well for the broader market too.


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