If you looked at the action yesterday one would have thought that Britain staying was a slam dunk. Poll after poll showed a tight race but all of them had them staying. The market was smelling this out and thus the strong action the market displayed yesterday. Funds were running to the buy button as they were afraid to miss the breakout over 2134 on the Sp. The market closed just one percent below that magical level that had the bulls frothing. Breadth was strong yesterday as well. Buying across the board, especially those financial stocks that were bound to explode once the vote for staying in the euro zone was completed. Sadly, and as usual, the masses were wrong. Why this reality occurs over and over again with regards to the stock market is a mystery but the masses were clearly wrong once again. Brexit was the vote. So long Britain. So long markets overseas. Massive falls. Anywhere from 3 percent to more than 15 percent. Some incredible blood baths with global contagion a real risk. Naturally the futures here at home took a hit. Not nearly as bad as overseas, when are they ever, but down hard. The Sp 500 down over one hundred points at the lows last night. They recovered somewhat but still gapped down hard. After the gap down we saw the usual strong buying for a while that tapered off as the day wore on with us closing down near the lows. When all was said and done the markets took a decent hit with the Sp 500 closing right at its support line in the sand or the 200 day exponential moving average currently at 2038. The banks are below the 200's and the Nasda is well below the 200's BUT the Sp 500 is still testing. If we get a gap down on Monday it has a potential to run given key support levels on the SP 500 right here at 2,025-35, Dow 17,300-400 and Nasdaq at the 4,700 level which can be seen in our charts this weekend.

Here's what could get the market to dive further. Now that one has left will others follow? Will Italy and others want to do the same thing? It is quite possible. It's the roach theory. Where there's one there's always more to be found. You get the feeling more and more countries are going to talk the same talk Britain did and if that's the case the market could be in real trouble. What's most interesting is while London was down 3% those left behind were down much more. The bullied bull market by fed Yellen still has low rates on her side and that's her best weapon for market protection. At some point you wonder if the real world will ever take over. If truth will be the name of the game instead of low rates by themselves. Think about the latest economic news as well. Last months jobs report was nothing short of a disaster. Then this morning, quietly, the durable goods report was a disaster as well. Expectations of minus 0.5% was met with a real number of minus 2.2%. Jobs and durable goods both reporting powerful misses on the negative side. The combination of problems are adding up fast and at some point maybe the truth will take over for low rates. We shall see. Poor jobs. Poor economy. Declining earnings. High historical p/e on the Sp 500. Massive negative divergences off our Monthly charts. Britain waving so long. Maybe all of this will equal an Sp below 2038. Maybe! We continue to remain in a heavy cash position given the proximity of our 2,100-35 Resistance zone which was tested numerous times but where we continue to find headwinds at the top of our range.

The bulls had many chances before the Brexit vote occurred. There were times when there was nothing bad happening in the news world but no dice for the bulls so no excuses. In times such as these you play from safety. You don't play from fear of missing or boredom. We need to learn a lot more about the intentions of both sides. We will likely remain out of the markets until the Banks/Brokers show some real bottoming action. Today we saw nothing but full candles to the downside. Will 2038 hold or fold away with force is what we need to learn about perhaps as early as Monday morning. Slow and easy here folks.