Market Alert - Pre-Market

Futures vs FV: SP +27.53; DJ +198.98; NASDAQ +49.77

After a couple of failed attempts at breaking higher off a good setup last week, stock futures are surging to start the week. Major growth story somewhere? No. A central bank intervening, cutting rates, ramping QE? No.

No, the catalyst is new polling in the UK that shows the 'stay' side in Brexit up 2 points. Two points gets you +200 Dow points. No change for the positive for Europe, i.e. the UK staying won't bring about great reforms to the overregulated, overtaxed system. It just maintains the status quo.

To us, it appears the financial market reaction is wholly not commensurate with the slight shift in polls, still 3 percentage points inside the margin or error. Just saying.

The ramifications for today could be that the early surge ends up by the close as not such a great surge. That is a possibility.

That said, the market was set up to make a bounce, failed a couple of tries late week, and this could push it over the top.

Thus, it is all about how the moves stick. For now, futures gapped higher early on and have held that same level for several hours.


OTHER MARKETS
Bonds: 1.661% vs 1.61%

EUR/USD: 1.1340 vs 1.1278

USD/JPY: 104.58 vs 104.115

Oil: 48.95, +0.97

Gold: 1286.00, -8.80


There is no scheduled economic news today but we could see some more Fed talk as we saw with Bullard last week where he went from supposed hawk to full dove.

The week leading up to the Thursday vote is still susceptible to volatility as polls re the Brexit swing. Some are saying the murder of the parliamentarian was a sacrifice for the benefit of the massive amounts of power and wealth at stake if the UK exits and leads to an EU collapse. Too many ultra wealthy and powerful people have too much to lose. Of course that makes most people recoil at the vulgarity of such thoughts, but some smart and reliable people have suggested that possibility.

Today it is about staying power and for us, of course, technical action. As noted, the market was set to bounce from the pullback after indices hit new recovery highs. They failed attempts, looked weak, but this wiggle in the polls on the Brexit is going to try to make the break and make it stick. If it does then we respond to the technical picture. A bit dubious as to the staying power, but we will see and let the charts talk.




Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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