A Glorious Day

What a glorious day for Britain and anyone among you who continues to believe in the ideas of liberty, freedom, and sovereign democratic rule. The British people have cast their vote and I have never ever felt so relieved about having been wrong. Against all expectations, the leave camp somehow managed to push the referendum across the center line, with 51.9% of voters counted electing to leave the European Union.

LEAVE

Waving good-bye to Brussels!

It goes without saying that this historic vote will have long term implications all across the rest of Europe, as resistance to a increasingly authoritarian, wasteful, and bureaucratic European Union has steadily been growing across the Euro zone over the past few years. The dominos are just now starting to fall. Minutes ago David Cameron announced that he will step down as Prime Minister , stating that the country requires fresh leadership

South of the border we already are hearing calls for a Frexit referendum from Marine Le Pen, leader of the conservative EU-skeptic Front National party. In light of this unexpected victory other nationalist leaders across Europe will certainly now be considering their options. Without doubt it is going to be a very hot summer in Brussels.

pig

Cameron resigned just now… said he wanted to have a few quiet days with his pig to mull things over.

Cartoon by Steve Bell

Market Turmoil

Financial markets across the board are in turmoil, as should be expected, with panic and news of impending doom and gloom spreading rapidly. The Dow is already down 600 points, the DAX has dropped by over 10% this morning, and the FTSE 100 is down 8.7% as of this writing [1][2].

The situation is highly fluid but let’s review some the carnage thus far. First up the British Pound, which took a pretty nasty hit overnight and is currently trading near 2009 levels. Thus far the lower 100-month Bollinger band and  the 1.38 mark have provided support. A further slide toward 1.3 is a definite possibility.

1_GBPUSD

British pound, weekly and monthly – click to enlarge.

EUR/USD down as well but not as much as I had hoped. What will it take for me to see this thing trading on par with the Dollar? Germany leaving the EU?

2_EURUSD

EUR-USD, daily and weekly – click to enlarge.

Equities – the S&P futures have already bounced back and note that the initial drop didn’t even manage to take out the 100-week SMA. I think we are in pretty good shape here right now, as long as the 2k mark can be held.

3_spoos1

S&P 500 futures (ES) daily and weekly – the 100 week SMA has held so far – click to enlarge.

The Dow also already on the mend and attempting to recover the 100-day SMA. Given the magnitude of the event that was a pretty minor response IMNSHO. Of course once the session opens we may see further weakness as positions continue to be unwound.

4_YM

Dow futures (YM), hourly and daily.

Gold was already fairly bullish ahead of the vote and is enjoying the attention. Not a huge response either here, but let’s see what the rest of the session brings.

5_gold

Gold, daily and weekly – click to enlarge.

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