S&P E-mini Futures:
Ripping higher but coming off its best levels.
Markets currently appear to be pricing 100% certainty that Britain will remain in the EU, something that feels dangerous.
Especially since the euphoria seems to come from bookmakers' odds which are derived from the total value of bets rather than number of bets. More people could be betting on leave, but a smaller number of deep pockets can skew the odds.
Two items elsewhere should give pause beyond the vote.
French manufacturing and services PMI both came in below 50. Bloomberg TV termed it "ugly."
And in Japan, a majority of the biggest private lenders are "still unwilling to borrow from the market for overnight loans almost six months after the Bank of Japan announced its negative interest-rate policy," Bloomberg noted.
Japan's interbank market is now less than half its size since before negative rates were introduced.
Important to recall that it was the Greek interbank market that seized the morning of the Flash Crash when the S&P dropped 100 points in five minutes.
Meanwhile, as equity markets are jubilant, most sovereign rates are higher.
Here lies the biggest risk to Risk On: a beautiful 5-wave impulse structure up in GBPUSD and a 3-wave corrective structure down in the US Dollar Index.
In other words, the pound may be primed for a correction, and USD may be primed for a rally.
Perhaps, for the pound, the best has already occurred.
Prices continue to push up yields in an ugly way.
WTI crude looked great yesterday morning but was coming off its best levels, something that brought on a sharp correction. NG may have just created a 5-wave structure down.
Gold and silver hovering around up and down. Copper up. Platinum and palladium down.
Speaking of 5-up in GBP and 3-down in USD, there is still 5-down and 3-up in the S&P 500 from the recent 2120.55.
Based on yesterday's price action, this continues to argue for a correction.
Even though futures indicate a strong open, unless 2120.55 is broken, the odds for a correction are still high enough to upset the market.
With gaps as high as 2119.12, there could be quite a rally. And potential for a quite an upset.
What if not? Unless the market moves in a virtual straight line above 2120.55 implying a strong third wave, I've been toying with the idea of a choppy continuation higher that peaks just above 2134.72 but then breaks sharply. Will draw a chart in a few days after the smoke clears.
Remember, no one knows anything until 5pm EST.