Commodities have been the biggest winners in the first half of 2016! With the Brexit vote today, expect some more volatility over the next couple of days.
Aside from the currency swings, we can expect gold, silver, oil and other global commodities to be impacted by the outcome.
Gold has not made much progress over the last few months, but it still is creating higher highs and higher lows. The relative strength shown in purple has been underperforming the $SPX since March. This is one of the hardest trades right now as the outcome of the vote will probably swing the chart higher if there is an exit, and lower if they remain in the EU zone.
$BRENT crude oil is set up here as well. With resistance at $53, a slowdown in trade would probably impact the expectations for oil demand.
Last week the bonds reversed and I'll cover that off in the Commodities Countdown webinar this afternoon. You can click here to register. Commodities Countdown Webinar @ 5 EDT 2016-06-23.
Don Vialoux gave the keynote speech at the CSTA AGM in Toronto on Wednesday. He mentioned that the summer months have endured a major spike in volatility almost every year. Will this year be the same? I think there have been a million articles on the presidential cycle, but almost every $VIX shock has been from offshore. Will presidential cycles take precedence or will a stalled Japanese economy create pressure on the global market? Needless to say, the crosscurrents for investors in the market are large. With the first half of the year almost in the books, we'll roll out some charts to get a feel for how the second half is setting up. I look forward to seeing you on the webinar!
Good trading,
Greg Schnell, CMT, MFTA.
