Playing the Brexit trade

Opinion polls seem to shift daily surrounding the “Leave vs. Stay” outcome for Britain – although at this time of writing it seems to be leaning towards a “Stay” decision. We’ll know soon enough.

Below is a chart of the iShares Europe ETF – which mimics the Europe 350 Index. As you can see- the index has been in a downtrend, as illustrated by the lower highs and lows on the chart. Potential signs of that downside momentum fading include a bullish crossover of the 40 and 10 week MA’s and a bullish hammer candle.

IEV

Thursday’s vote will swing things one way or another. But the charts can tell us the safest way to trade this index. A break of the last high to the upside would imply a potentially bullish trade for Europe. That’s about $41 on this ETF. A break below the last low of $36 would be bearish. That would imply that the downtrend will continue.

Here’s the UK ETF chart–possibly a H&S bottom forming, but wait for a $16.50+  neckline breakout:

ewu

 

Watching market reactions to the vote will show us where the trend is likely to move. My vote is to stay on the sidelines for now, and trade accordingly if one of these levels are taken out.

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Put Wednesday July 13th at 6:00pm on your calendar

Regular readers know that I am a monthly guest on BNN’s MarketCall shows. BNN has asked me to team up with my Associate, Craig Aucoin on a special MarketCall episode on July 13th. Craig is the resident Fundamental Analyst here at ValueTrend. ValueTrend is unique in that we separate the two disciplines of Technical and Fundamental Analysis.  Stocks are reviewed independently by each analyst, without interference or influence. Thus, if I pass a stock technically, Craig must then review the stock independently by using his quantitative and qualitative methodology. Only if a stock passes both of our analytics will it go onto our approved list.

 

Viewers of this special show will have the unique opportunity to hear from both of us when calling in with their stock questions! Combining these disciplines can increase your portfolio profitability and stability. You won’t want to miss this special edition of MarketCall. Be sure to mark it in your calendar!

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2 Comments

  • This is a good day for patient retail investors.
    Time to buy Canadian, USA & European ETFs that have covered calls.
    The uncertainty is over, and given that it will take 2 years for Britain to ‘divorce’ from EU,
    I say the world will not come to an end.

    While the world uselessly debates low interest rates, which are staying low for the next decade, and other terrible events that will not come to pass, stop procrastinating.

    So … buy the dips today, with large cap covered call ETFs and collect a nice yield, as the world sweats. I went from 35% cash to all-in and 5% cash remaining to pay taxes at the end of year because of my capital gains and cash dividends.

    I bet Monday will be an up-day in all markets as the world calms down over the weekend.

    Reply
    • Some research i did, which i will put in todays blog – suggests 3 days or so selloff after major events. So Friday was not a buy day–Monday or Tuesday most likely.

      Reply

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