Markets Do Not Like Brexit's Many Unanswered Questions

Includes: EWU, IVV, SPY
by: Chris Ciovacco


There are countless unanswered questions following Brexit.

Is a formal plan in place to leave the EU?

Have markets held near support?

There Is No Plan For Brexit

Bloomberg recently published a short Brexit Q&A. The excerpt below pretty much sums up the level of uncertainty surrounding the monumental and unprecedented task of having a country leave the European Union via Article 50.

Brexit And U.S. Stocks

This week's video looks at the markets (NYSEARCA:SPY) pre- and post-Brexit to gain a better understanding of the potential downside risks.

After you click play, use the button in the lower-right corner of the video player to view in full-screen mode. Hit Esc to exit full-screen mode.



Leadership And Execution Issues

Not only is there no plan in place for Brexit, the U.K.'s (NYSEARCA:EWU) government is also in flux after Prime Minister David Cameron's resignation following last week vote. From The Wall Street Journal:

Investors face a range of question marks following the vote, including the makeup of Britain's political leadership, the country's future relationship with the EU, the long-term impact on business confidence and investment in Europe, and the response it will prompt from policy makers and politicians around the world. "There are just so many moving bits…it's a highly uncertain future," said Mark Harris, head of multiasset at City Financial in London. "To say that I'm stunned is an understatement," he added.

S&P 500 Breaks Support Intraday

In the United States, the S&P 500 (NYSEARCA:IVV) dropped out of its multiple-month trading range (green box below) during Monday's session.

Monday's session also was marked by very strong trading volume in the S&P 500 ETF , which continues the concerning trend outlined on June 22.

Disclosure: I am/we are long SPY.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.