Although fear that the UK will leave the European Union is declining, the new worry is that even if Brexit fails, it may not produce the huge sustained rally that the bulls are hoping for. The market is in the process of pricing in the results of Thursday's votes and market players are starting to wonder if this may turn into a "sell the news" event.
If the polls are wrong and Brexit wins, we are going to have some real drama on Friday. It will be a very ugly surprise for a market that is becoming increasingly confident about the results. The problem is that although this is a binary event, the downside potential is probably far greater than the upside. It is not a balanced bet and that fact is what is causing the tepid upside action even as the polls trend in favor of the "stay" vote.
Unfortunately, the wait for a Brexit resolution makes for very dismal trading. We have some minor gains in the indices, but breadth is running negative and very few pockets of momentum exist. Biotechnology continues to be pummeled, but there is some slight relative strength in semiconductors. A few oils like Stone Energy (SGY) and Emerge Energy Services (EMES) are attracting speculative traders, but the scans are producing very little.
I've made a couple of minor sales and continue to dig for new buys, but I have found nothing of interest. The metals like Teck Resources (TCK) and Hecla Mining (HL) are some of the more interesting charts, but they are biding their time like everything else while we await the Brexit vote.