Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
PAYPAL WARNING - Your Stimulus Funds Are at Risk of Being Frozen for 6 Months! - 5th Apr 20
Stocks Hanging By the Fingernails? - 5th Apr 20
US Federal Budget Deficits: To $30 Trillion and Beyond - 5th Apr 20
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition - 5th Apr 20
Visa Denials: How to avoid it and what to do if your Visa is denied? - 5th Apr 20 - Uday Tank
WARNING PAYPAL Making a Grab for US $1200 Stimulus Payments - 4th Apr 20
US COVID-19 Death Toll Higher Than China’s Now. Will Gold Rally? - 4th Apr 20
Concerned That Asia Could Blow A Hole In Future Economic Recovery - 4th Apr 20
Bracing for Europe’s Coronavirus Contractionand Debt Crisis - 4th Apr 20
Stocks: When Grass Looks Greener on the Other Side of the ... Pond - 3rd Apr 20
How the C-Factor Could Decimate 2020 Global Gold and Silver Production - 3rd Apr 20
US Between Scylla and Charybdis Covid-19 - 3rd Apr 20
Covid19 What's Your Risk of Death Analysis by Age, Gender, Comorbidities and BMI - 3rd Apr 20
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast

Stock-Markets / Financial Crisis 2016 Jun 23, 2016 - 04:43 AM GMT

By: Nadeem_Walayat

Stock-Markets

The EU Referendum according to the opinion polls is too close to call as illustrated by the most recent opinion polls and resulting momentum analysis that literally puts the vote on a knife edge. However the same does not hold true for the bookmakers or financial markets that are apparently assuming that a REMAIN outcome is a done deal which is set against my forecast conclusion for Brexit, from someone who correctly called both the 2015 General Election that the pollsters got so badly wrong and the 2014 Scottish referendum.


Opinion Polls

Whilst the opinion polls momentum chart clearly shows a trend since Mid May of LEAVE gaining ground against REMAIN which by the start of June had both virtually neck and neck into the 13th of June when LEAVE started to pull strongly away from REMAIN, right up until last Thursdays horrific event that literally resulted in momentum being put into reverse gear for LEAVE that led to REMAIN taking a marginal polls lead that appears to have evaporated in the final day of campaigning to give LEAVE a marginal lead going into polling day.

So it is no wonder that most political pundits are sat on the fence, calling the referendum as being too close to call as now both sides are virtually neck and beck with marginal advantage to LEAVE with only hours until the polls open, though with the momentum in LEAVE's favour which means that LEAVE should continue to improve as people go to the polls.

Financial Markets

The British Pound has leapt higher to the top of its trading range for the year with the latest trade at 1.4683, that is indicative of a market that is apparently strongly discounting a REMAIN vote outcome as the uncertainty of the past 3 months appears to have evaporated (a regulated global investment brokerage).

Similarly UK stocks as illustrated by the FTSE have sharply bounced back in recent days from a three month low.

Whilst UK bonds have in fact been trending in the opposite direction of that implied by increasing risks of a BrExit vote which is indicative of both central bank intervention and safe haven buying, with the most recent rise in the 10 year bond yield to 1.31 indicative of flows back into the stock market and other risk assets. Overall the UK bond market is showing none of the signs of what operation fear has been warning of i.e. for a sharp rise in interest rates, which even if BrExit happens clearly does not look probable.

So with the polls so evenly balanced why are stocks, bonds and sterling so relaxed about the referendum outcome that could yet see BrExit happen? Exactly what message are the markets sending us ?

Is it that the opinion polls are once more badly wrong and that instead REMAIN is heading for a sizeable victory or is it that the outcome of the vote does not really matter as much of the threats from Brussels and promised withdrawal form the single market will soon evaporate as the UK more or less just ends up tweaking its membership of the EU rather than exiting the EU. THAT IS what the markets are saying is going to happen!

Book Maker Odds

The bookmakers are just as the markets strongly discounting a REMAIN outcome, where for instance Betfair's odds in favour of REMAIN have now greatly improved from 1.6 a week ago to 1.29 today. Whilst LEAVES odds have widened from 2.60 a week ago to 4.3 today, again reversing earlier momentum in favour of LEAVE that now gives Brexit an implied probability of just 20% and thus conversely REMAIN on an implied probability of 80%, which in trading markets terms is VERY HIGH, an 80% probability for a particular outcome is VERY HIGH. So where the bookmakers are concerned BrExit is VERY unlikely.

EU Referendum Forecast

And finally my forecast conclusion on the basis of the sum of year long analysis including over 120 articles and over a dozen videos concluded that the most probable outcome was likely to be LEAVE winning on 51.3% against REMAIN on 48.7%.

EU Referendum Forecast - 12th June 16

UK 2016 EU Referendum Forecast

The average of the last 6 polls has REMAIN in the lead on 51% against LEAVE on 49% (11th June). However the REMAIN lead is set against the big picture of momentum being on the side of LEAVE that appears to be ACCELERATING. For instance 3 weeks ago REMAIN were ahead on 54% to 46%, which was typical of the REMAINs lead since the start of 2016 that entered the new year on 56% against 44%.

However, if as I expect that the LEAVE campaign momentum can be maintained for the remaining 11 days then LEAVE should be able to just achieve a tight referendum victory. Therefore the sum of my year long analysis comprising well over 120 articles and over a dozen videos then my forecast conclusion is for a LEAVE victory of 51.3% to 48.7%, a winning margin of less than 2.7%.

But to achieve this victory all Brexiters need to further intensify their efforts because as things stand today (12th June) REMAIN is probably just marginally ahead with less than 1% between REMAIN and LEAVE on an estimated 50.4% REMAIN against 49.6% LEAVE, so there is still a lot of hard work to be done in these last few days do achieve a LEAVE Brexit outcome.

Trading BrExit

In terms of trading the markets, and despite the markets apparently no longer treating Brexit consequences seriously, a case of whatever happens it will be business as usual, nevertheless a BrExit outcome will result in sharp downwards swings for sterling and FTSE, even if the moves prove temporary as the politicians and central bank officials are likely to respond to both with market soothing words of nothing has really changed and of course the Bank of England releasing tens of billions of more market liquidity support.

So taking account of my forecast conclusion for a BrExit outcome then the current stock and forex markets are offering the potential for good risk vs reward short-term trades. However remember that volatility will be HIGH which means that even if one gets the direction right then if the stops are not set wide enough then traders can get stopped out of positions BEFORE the profit making moves take place. Or that of REMAIN does win then the market may gap well beyond ones stops resulting in larger losses than the potential that had been allowed for.

And so also are the bookmakers giving what appear to be good risk vs rewards odds of 4.3 to 1.

Friday definitely looks set to be a very interesting trading day, your analyst hoping he does not get stopped out of short side profit making moves!

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2016 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

JustAnotherExBanker
23 Jun 16, 16:23
Thanks, Nadeem - I've just placed a small bet

Nadeem, I've been following you blog since 2008 and in that time you've been right about most things, especially the most important issues.

At lunchtime today, Betfair were offering 7.9 to 1 odds against Brexit. That seems crazy with opinion polls being neck-and-neck, plus your analysis predicting a win for Leave. Therefore, I staked £30. If it weren't for the wife, I'd have bet a lot more!

Cheers, Robbie.


Nadeem_Walayat
23 Jun 16, 17:31
Trading Brexit

Good luck, I could not reist either and put a little more on ;)

Though where markets are concerned, even if Brexit does not happen, stocks and sterling could still plunge, so it's not black and white, it's a case of managing volatility.

Best

NW


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules