Breaking Down Today's Brexit Vote: Will Theresa May Resign?

Posted: Dec 12, 2018 9:37 AM
Breaking Down Today's Brexit Vote: Will Theresa May Resign?

CERN, the European Organization for Nuclear Research, says its goal is to uncover what the universe is made of and how it works. It does this by using the world’s most powerful particle accelerator complex. It hurls atoms into each other at nearly the speed of light in order to one day recreate the Big Bang and to unlock the secrets of the universe.

The biggest discovery yet is the so-called Higgs Boson particle that Stephen Hawking says could destroy the universe.

I have different thoughts on the origins of the universe, but as I watched the stock market gyrations over the last couple of days, I couldn’t help but think about those atoms spinning around and around at the speed of light, ultimately smashing together. The market is moving in big chunks in the blink of an eye, and it feels as if it’s going to smash into something soon.

The question is whether it’s that support point, which continues to hold up very well, or maybe it will turn and rally through the resistance, which would be a stock market Big Bang.

Yesterday, the Dow rallied up 368 points out the gate, and then tumbled 200 points before the late afternoon move of 170 points higher before finally settling down 53 points. If the folks at CERN could figure out a way to tie an atom to these gyrations, they might get the answers they’re looking for. 

Meanwhile, investors are still seeking answers, but for now, they would settle for calmness.

The 1,000-point Dow Jones Session

The Message Of The Market

I have to say, while most of the smart investors and traders I know and interview, see the recent action as a prelude to doom. I’m very impressed at how the market continues to climb off the canvas and rally off key support points. 

Of course, there’s a long way to go to challenge the upside resistance. It’s way too premature to speculate on breakouts, but this testing of weaker hands has shaken out a lot of folks that must also be eager to buy. I continue to see initial strength in momentum names setting up the upside test.


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Geopolitical Hijinks 


Last night, a Canadian judge granted bail to Meng Wenzhou, the Huawei CFO arrested for violating U.S. sanctions on Iran. While both sides say the arrest has not interfered with the negotiations, the bail news is a sigh of relief in a tension-filled environment. Bail wasn’t cheap:

  • $7.5 million cash and assets from Wenzhou
  • $3.0 million cash from friends as guarantors to vouch she shows up to court


The vote of no confidence has been triggered, which means a larger vote happens later today.  It takes 48 conservative MPs to trigger a vote.  May needs 158 votes, out of the 315 Conservative MPs who are eligible to vote, to win the confidence vote.  Right now, betting is May will win, but there will still be pressure to resign.   The Brexit news played a big role in yesterday’s wild gyrations. 

Trump News

Last night, President Trump said he would intervene in the Huawei case if it helped trade and North Korea negotiations.  Also, last night, President Trump said the Federal Reserve would be “foolish” to raise rates at next week’s gathering.


News that China is prepared to make changes in its Made in China 2025 plan has added move to the market, that has been higher all morning, in part due to the belief Theresa May will survive her no confidence vote, and comments from President Trump’s willingness to potentially return the Huawei executive if it helps trade negotiations.

On the upside key resistance numbers for the Dow

  • 24,762
  • 25,043

The big breakout that everyone must own comes with a close above 26,000