Oh baby you know what I likeChantilly lace and a pretty face
And a pony tail a hangin' down
That wiggle in the walk
And giggle in the talk
Makes the world go round
There ain't nothin' in the world
Like a big eyed girl
That makes me act so funny
Make me spend my money
Well Brexit is official as the UK finally sent it's breakup letter to the EU (not a text, mind you, the UK is classy that way) and now there is a definitive 2-year countdown clock before they officially divorce – unless they decide to extend it – then it could be longer. Makes you kind of wonder what all the panic was about. It's like when your parents get divorced but keep living in the same house.
The markets continue to be divorced from reality as we watch the S&P run a textbook 5% Rule™ correction as it falls 2.5% to 2,340 from 2,400 and that's a 60-point drop so our fabulous 5% Rule™ predicts a 20% weak bounce (12-points) to 2,352 and a 40% strong bounce to 2,364 which, no coincidentally at all, happens to be the 50-day moving average on the S&P.
Of course we are shorting at the 50 dma. I put a note out to our Members this morning in our Live Chat Room, saying:
/YM testing 20,600 from above – off a bit from yesterday's close. /ES 2,350, /NQ 5,406 and /TF 1,361 – all off their highs and we can play the laggards below those lines (5,400 on /NQ and 1,360 on /TF).
As noted above, these are just the weak bounce lines we expected to get to (and fail) after last week's sell-off so, if we're breaking down here – it's a good sign to short the indexes again.