I strongly believe that if Brexit wins (it does, though, appear to be the underdog), then we will have a massive selloff in stocks globally.
This view is based on my thinking that traders generally view a Brexit win as a terrible outcome for global economies. But at the same time, watching market action, it appears that traders believe that Brexit will go down to defeat.
Therefore, if Brexit wins, you will have traders reversing positions and tremendous fear about economies in the wake of such a win. The selling will be substantial without knowing exactly how much selling will occur.
I just suspect that the panic will be very intense immediately after news of a Brexit victory.
It is possible that British and continental European stock markets could selloff by 10% or more. In the U.S., a selloff of 3% is possible. The greater the selloff, the greater the opportunity but I would buy into the selling regardless of the actual percentage. The selling will be most intense immediately after news of a Brexit victory and that will be when the greatest buying opportunities will be.
If the less likely scenario does develop and Brexit does win, I would buy a 50% position of funds I designated for the trade immediately on the news and scale in further buying over the remainder of the day.
This is what happened immediately after Brexit and how prices closed today for Britain's FTSE 100:
With US stock markets we got two buy points. The first on Friday, the second on Monday, before three rebound days. This is what I wrote on Monday.:
The US Dow Jones Industrial Average is off its low, down 1.31% on the day. For US markets, the panic Brexit selling appears to be just about over. For aggressive investors, continue to add to general US stock index long positions. Also extremely attractive are banks stocks, which are down over 10% since Thursday.
Bank America, Citi, Goldman Sachs. Wells Fargo and JPMorgan Chase are all buys in here for traders. Also attractive is the iShares U.S. Financial Services ETF (Symbol: IYG).
I think you will find it very rare to see such clear detailed forecasts of how things will develop. I did the same thing when I warned in real time of the developing financial crisis in 2008 (Details of my real time crisis forecast is in The Fed Flunks).
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(Note: Past spectacular forecasts do not necessarily mean future spectacular forecasts.)