Courtesy of Blain.
The panic mongering by the financial media leading up to the Brexit vote was downright embarrassing (and we were mocking it) – and with the benefit of hindsight a week later, it was downright pathetic in light of the way markets have acted. The S&P 500 gained 1.33% and the NASDAQ 1.36%; zombies and locusts everywhere are very confused. That said the violence of the move upward even surprises me.
There was more talk today of more central bank intervention which market participants ALWAYS love. Bank of England Governor Mark Carney said further stimulus measures may soon be needed for the U.K. given the country’s vote to leave the EU. The European Central Bank is considering changing the rules regarding the types of bonds it can buy as part of its stimulus package amid concerns it could run out of securities to buy under current stipulations, according to Bloomberg News. (Convenient timing, eh?)
The Chicago PMI reading for June came in at 56.8, well above a May reading of 49.3. Any reading over 50 signals expansion.
“The market is breathing a big sigh of relief that Brexit didn’t trigger the end of the world,” said Adam Sarhan, CEO of Sarhan Capital.
“We are clawing back from the losses after Brexit as investors realized that it was not the watershed event that they thought it was,” said James Abate, chief investment officer at Centre Asset Management LLC.
The S&P 500 is above all moving averages but bulls want to make sure that 50 day moving average begins to slope back upward. The NASDAQ still has some work to do but is looking a lot better than 3 days ago of course.
The NYSE McClellan Oscillator is almost in our yellow overbought band…after being in the red oversold band just days ago.
The fly in the ointment remains 10 year yields – with this type of rally you’d expect yields to be north of 1.60% at least.
Shares of Hershey (HSY) surged 16.8% amid talks of a possible takeover bid from Mondelez (MDLZ). However, Hershey’s board unanimously rejected Mondelez’s offer Thursday afternoon. Mondelez offered to pay $107 for each Hershey share, through a mix of cash and stock.
Shares of Lions Gate Entertainment (LGF) shed 3.4% following an agreement to be purchased by Starz (STRZA) for $4.4 billion in cash and stock. Starz’s shares popped 5.9%.
