The Brexit hit market. The S&P500 crashed by 3.6%, driving the market down by 1.6% for week and driving 2016 to red territory. Will the crash continue? The big question, of course. Well, not likely. The Brexit is a slow process which will last for years. The influence on the US stock market may not be noticeable at all. However, we need to consider the fact that the low Pound will have some effect on US exports. The pound is declining and this should help the economy, but this will probably be offset by a continued low interest rate. In fact, Brexit may have no influence on the US market. I do not expect the market to pull back from May. There is small panic in the market, so I do expect a continued decline of 3% to 5%, but I don't anticipate any crash. Also, we need to remember that we are nearing the end of the second quarter where institutional traders are likely to buy at this point, or at least they will try to hold the market at current position. So I do consider the fact that the market is downtrading and it should continue, but I do not expect any panic.
Let's take a technical view of the market. While taking a look at the S&P 500 daily, we can see that the market moved down exactly to the point of support. I do expect it to be broken down, meaning the market should continue moving down, but again I do not expect a crash.
Let's take a look at last week picks. We had two picks last week, the first one was CCI. It did well, although the market moved down. It was one of the few stocks that in fact moved up. It did not reach my 3% target, but did almost 3%, exactly 2,7%, and I hope we are going to see some continuation this week. The second pick AEP, also one of the stocks that did move up, it reached only 0,8%, so I am still looking for continuation, but it is doing well.
Let's have two picks for this week. My picks for this week are both financial companies. The market should continue moving down, however financial stocks are getting hit very strongly. The first one to show you is Morgan Stanley (NYSE: MS) short under 24,23 USD and the second one is Goldman Sachs (NYSE: GS) short under 140,92 USD.