Friday, 24 June 2016

Blog post: S&P 500 day of #Brexit, price action changes outlook for coming months

S&P 500 price action over the past 12 hours has changed my outlook for coming months. It's been a wild day on markets with Britain voting to exit the EU. Given that the S&P cash futures have declined strongly, it may surprise that my stance has changed from bearish to bullish. Let me explain.

I'll begin by illustrating my bearish stance from the start of the day, with an Elliott Wave count that I have held to for some time. This chart was tweeted yesterday. 

Shortly after New York trade closed for Thursday the S&P 500 cash futures poked above the June high. With that wiggle higher, I don't think it is sensible any longer to count the rally from February as a wave B. I think the following count now best fits. It calls for a strong rally next in wave 3 to new all time highs.

Keep in mind that as tweeted earlier today, I started the day short #SPX and got stopped out just above the earlier June high, so I have missed today's decline, and this sudden bullishness could be my Fear Of Missing Out talking (FOMO is my biggest weakness). Truly I always do my best to call the chart patterns as I see them, but anybody who has traded will know that emotions can screw things up. And, even if analysis is spot on at a point in time, the market will do whatever it wants. It constantly presents new information and therefore constantly demands fresh analysis.