The selloff since Friday may seem momentous to trade-desk denizens, but so far it has barely caused a blip on the Dow’s weekly chart (see inset).  Would another thousand-point selloff seem scary? As you can see for yourself, even that would not exceed any important prior lows. It would in fact require a further decline of 1638 points to do so — to suggest that the post-Brexit plunge is anything more than a nasty shakedown by those who control the markets with practically unlimited borrowing power.

The foregoing is intended to remind you that Brexit is not necessarily the end of the world. Indeed, there are as many positive arguments to be made for the outcome as negative, and that’s why the reaction of securities markets globally seems greatly overdone. Yes, we still should keep close tabs on the selling, since there’s always the chance it could snowball into a bear market that seems long overdue. But my gut feeling is that stocks will reverse shortly, perhaps as early as Tuesday, a statistical turnaround day. If so, a logical price where this might occur is from 17008, the ‘secondary’ pivot of a minor pattern on the 15-minute chart (a=18011, b=17356); or perhaps from 16845, the pattern’s ‘d’ target. Neither of these Hidden Pivot supports corresponds to the 1973.50 target I’ve proffered for the E-Mini S&Ps, so both vehicles will have to be monitored and traded separately, presumably with very tight stop-losses if bottom-fishing. Alternatively, if these levels give way very easily, it would imply significantly lower prices ahead. We’ll wait and see. Visit our 24/7 chat room and share timely ideas and real-time results with great traders from around the world. Click on the link for a free trial subscription

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 -- Published: Tuesday, 28 June 2016 | E-Mail  | Print  | Source: GoldSeek.com

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