Market Insight

Tues Pre-Market: Oversold Bounce Into End Of Month and Qtr… 06/28/2016

We received quite a few thank you notes for adopting our cautious stance BEFORE Brexit and largely sidestepping the damage. That’s exactly why we are here & why we created this service for you.

Market Update:

The damage since Friday is enormous, markets are currently oversold and due to bounce. That’s what we are seeing this morning as we are back in the awkward guess the gap mode (where you wake up and literally guess which way the market is going to gap).

Short term:
The market is trying to bounce from very oversold levels as we enter the end of month and the end of quarter. Remember, markets don’t go straight up or down so it would be perfectly normal for markets to bounce after the worst two day sell off since 2008!

Intermediate and Longer Term:
The key now is to analyze the health of the bounce to see if it is just a short term bounce before the downtrend resumes again or if this bounce can get some legs. In order for the latter to occur, we would need to see some new leadership emerge. We will definetely keep you posted on that front if new leadership emerges.

Spoiler Alert: Central Banks At It Again

Overnight, Draghi juiced markets when he called for more coordination from Global Central Banks.

Here’s the latest excerpt from Bloomberg this am:

Draghi calls for coordination

European Central Bank President Mario Draghi has called for greater alignment of policies to address the root causes of the challenges facing the world’s economies in a speech this morning that made no mention of the U.K. vote. At his introduction to the annual ECB economic forum in Portugal yesterday he said that “sadness” best described feelings over the referendum result. Federal Reserve Chair Janet Yellen, who was scheduled to attend the forum, pulled out yesterday without explanation.

Bottom Line:
We have no interest in playing “guess the gap” game when markets are trading all over the map. We still believe that the market is forming one large top and it is a matter of time until we enter a new bear market. Of course, central banks can change and more time and price action is needed to know for sure. Right now, for our approach, patience is king. We will have more for you as the week unfolds and we head into the long weekend.

Disclaimer:
This analysis contains information from resources believed to be reliable but are not guaranteed as to accuracy or wholeness as of the date of this publication. Past performance is not necessarily indicative of future results. There is always a risk of loss in trading and investing. Opinions articulated are subject to change without notice. This analysis and any opinions expressed are intended for educational purposes only and should NOT BE interpreted as a call for engagement in any transaction involving the purchase or sale of any security or investment product or service. The risk of loss in investing and or trading can be substantial, and traders/investors should carefully consider the inherent risks of such an investment in light of their financial condition. The author, firm, associates, or the firm’s clients may have a position in any of the investments mentioned and their positions are subject to change without notice. Any reproduction or retransmission of any portion of this report without the express written consent of Sarhan Capital is strictly prohibited.

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Adam Sarhan

Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.

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