Australian Investment Blog

We MUST Remain Focused During Heightened Volatility What a difference a few days makes, only last Thursday we pointed out that US stocks had moved less than 0.5% for 9 consecutive days, but warned of a potentially large move ahead due to all the geopolitical risks on the horizon. This concern has played out in dramatic fashion as the BREXIT vote appears to be no longer a foregone conclusion – hence, reaffirming our logic in holding around 36% in cash. Bookmakers, who are historically far more reliable than polls, have increased the possibility of a UK exit from the EU from 15% to 38% - the "Remain" vote is still ahead, but the risks of an exit have increased. The VIX (Fear Index) Weekly Chart With volatility increasing in most financial markets, today's report is focusing on a few different specific areas as we keep our finger on the pulse during these exciting times. BREXIT There looks to be no doubt that this will be the focal point for markets over the next 9 days. Last night, UK stocks fell another 2% making it a 6.3% reversal over the last 2 weeks. The good news for equity markets is we now have the potential for bad news built into stock prices to a certain degree. A buy signal will be generated for the FTSE on a break back over 6075 - even before the vote.
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