Stock Market Today: The Post-Brexit Bounce Continues!

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U.S. equities continued the low-volume, short-covering, dead-cat bounce on Wednesday as investors responded to stability in the currency market on hopes and rumors of coordinated central bank intervention.

Breadth remains tepid. And a lack of volume suggests this is a whipsaw move before the medium-term downtrend reasserts itself. But for now, risk assets are melting higher.

In the end, the Dow Jones Industrial Average gained 1.6%, the S&P 500 Index gained 1.7%, the Nasdaq Composite gained 1.9% and the Russell 2000 gained 2.2%. Treasury bonds weakened into the close, with the 10-year yield pushing above 1.5%. Elsewhere: The dollar was down against the sterling and euro; gold rose 0.7%; crude oil gained 4.2% on inventory data.

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Financial and energy stocks led the way with gains of 2.3% and 2%, respectively. Oil services names were a bright spot. Nike Inc (NYSE:NKE) surged 3.8%, capping a 6.3% two-day gain, despite reporting disappointing results as investors focused on the company’s long-term potential. Alcoa Inc (NYSE:AA) fell 2.5% on the release of detailed plans on its upcoming corporate split.

On the economic front, pending home sales fell 3.7% in May over April, the worst showing since early 2015.

Stepping back, it’s important to remember that the more central bankers and their Wall Street allies engineer a quick market recovery, the more it will embolden pro-independence movements in places like France, Italy and Portugal. And with a three-day holiday weekend coming up, and the start of the second-quarter earnings season just a couple of weeks away (on track for the fifth consecutive quarterly decline in profits), I expect the selling to reappear later this week.

Technically, the Dow Jones Industrial Average is about to hit resistance from its 50-day moving average just below 17,800 as short-term moving averages move below intermediate-term averages for the first time since May.

The downtrend, for now, remains confirmed despite what’s been the nastiest short squeeze since 2011 over the last two days.

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One clear sign that all is not well was the 2.7% surge in the iShares Silver Trust (ETF) (NYSEARCA:SLV) to new post-Brexit highs as investors continue to worry about market and foreign exchange turbulence, as well as the likelihood of ever-increasing monetary policy aggressiveness.

The rise boosted the July $17 SLV calls recommended to Edge Pro subscribers to a near 50% gain.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/06/stock-market-today-nyse-dow-jones-industrial-average-investing-news-brexit-bounce/.

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