Posted by Danny on June 6, 2016
Stock markets have started sputtering right at the obvious resistance levels. To push through or to pull back, that’s the question at this point. Let’s have a quick look at the S&P 500 chart:
A push towards 2150 or a retreat to just above 2000, at first glance both appear more or less equally possible if you look at this chart.
My faster Earl indicator (blue line) is the first to turn down, which is often a good early warning sign but does not rule out a few more days of upside action (which could take the index to 2150 before pulling back). The slower Earl2 (orange line) keeps pointing up, which means that any pullback could be rather short-lived.
I am not going to put my hand in the fire for either outcome. With this kind of setup it is usually a good time to go fishing or surfing. Political noise, like Brexit vote, is likely to keep making headlines for most of June and that doesn’t make it any easier to tell which way the market will swing next.
A new lunar red period will start later this week, so from that perspective stocks are likely to remain under pressure in the coming weeks.
Note: a lot of commentary seems to take it for granted that a Brexit would mean a drop in stock markets. I wouldn’t be too sure about that. Stocks may go up on Brexit news, or just drop for a few hours and then rebound.. Always expect the unexpected.
Bottom line: yes, go fishing and come back by the end of June.