Euro, Dollar, Pound...06.29.16

Another big up day as worries over BREXIT start to subside as analysts presented arguments today supporting US equities as the risk adjusted place to be.  As a result TLT was crushed along with the inverse ETFs.  Its end of the month going into Friday and the bulls still have the edge.  My wife the Forex trader uses Bollinger Bands on multiple time frames to help enter and exit trades and she happily showed me the the current Euro dollar and Pound/dollar charts to inform me "I told you so." when she predicted a major turnaround Monday night.

Charts courtesy of OANDA.

PONZO Updates..06.28.16

Turnaround Tuesday produced a 1% reversal to the upside for equities but its early in the day (2 hours in) and the markets have been selling down since the open so where we close is anyone's guess.
The PONZO updates show that we've hit the outlier scenarios and are now most likely to flat line for the near term.  The VIX in particular looks like the downside is the best odds and today's 17% retreat may signal a movement back down to the 12-14 levels.

BB Indicators SIgnal Likely Turn...06.27.16

The Bollinger Band Indicator is now fully overextended by 2 standard deviations on our 3 input study group...SPY, VIX and TLT (130 minute bar charts shown below) and the odds for a imminent bullish move are increasing. TLT did hit a new all time high today jumping a whopping 2.5% to close at 139.50.  The proverbial Turnaround Tuesday is upon us tomorrow although the markets remain skittish in the face of uncertainty over what the BREXIT will actually mean.  If you were positioned on the wrong side of the BREXIT vote you are not alone.  George Soros who made a cool $ billion dollars in 1992 and broke the Bank of England in the process was in the BREMAIN camp, but he's still got a few billions laying around to recover down the road..

VDX Updates...06.26.16

After the week that was and one that will go in history the VDX charts are clearly overextended in all directions.  And it may not be over yet as traders brace for collateral damage from Friday's selloff.
Ripple effects are likely to be felt for weeks, if not months and and current FED fund forecast is no rate increase until at least 2017.  We'll look at the odds for dip buying tomorrow and then I'm on the road for a couple days for a pair trading seminar. Here's a link to Mauldin's latest thinking about possible things to come.....it's long, but well argued and filled with a few surprises.
In the meantime technical analysis should be considered a risky basis for timing investments.

Still Iffy on the BREXIT...06.23.16

The markets surged up right into the close and then further in after hours in anticipation of a REMAIN vote.  Current polling results (7 PM PST) indicate that's not a sure thing and the markets have reversed course to the downside.  There's still a few hours to go ahead of official results so stay tuned.  If REMAIN is the choice we may still see a sell the news reaction as many talking heads suggest a positive vote has already been fully priced into the EFA and the SPY.
Meanwhile, here's the current cross market M6 momentum model and the latest signal.
We exited our Friday straddles and butterflies at the close today...all positive thanks to the closing runup.

The State of EFA..06.22.16

Continuing the countdown to the BREXIT vote on the 23rd EFA is maintaining positive momentum.
Looking at the chart today it looks like a gap down but this reflects the semi-annual ex-div today of $.51, which makes it appear that ETF is down when in fact its up.
The current thinking is that the odds are stacked with the Remain camp and EFA has been moving accordingly.  IF that choice prevails the previously anticipated major jump in the Euro related equities may be more tepid since much of the pop has already been priced in.
If the BREXIT succeeds then there will be a much more volatile outcome.
US traders should know the BREXIT outcome approx. 4 AM PST on Friday
In the meantime here are the 130 minute  and daily bar Bollinger band charts of the EFA indicating that the action could go either way.

AN EFA BREXIT setup and PONZO Updates....06.21.16

Two days until the vote and sentiment continues to favor REMAIN.
EFA (EURO 900 ETF) is up 1%+ and climbing into the afternoon session.  Yellen spoke today but it appears nobody cares since the odds of a near term FED rate hike are zero.
Here's an EFA butterfly in the spirit of the weekend post with an attractive (to me) risk/reward.
Following the butterfly setup the Ponzo updates forecast and lower VIX and bullish bonds.
All bets however are on the vote.  Fundamentals trump technicals but news trumps fundamentals.
Ponzo retains the outlier scenario of a short term explosion in VIX and TLT so caution is advised.