Michael Purves is the chief global strategist and head of equity derivatives research at Weeden & Co. As a regular guest on financial media outlets, he shared his views of the current market on
CNBC early Tuesday morning.
Purves spoke at a time when major U.S. index futures were surging with the futures indicating a triple digit rally for the Dow Jones index at the market open.
According to Purves, the early morning buying is a "reaction to heavily over-sold conditions on the shorter-term chart" and these relief rallies are common after large sell-offs.
Purves did point out that the Brexit voting outcome is still new and fresh, not to mention "very complicated" to fully comprehend. As such, it is not necessarily the time for investors to jump in and "start playing offense."
He continued and offered several signals that would indicate a continued bullish market is likely: 1) are United Kingdom bank stocks trading near a bottom, 2) has the British pound found a bottom, and 3) when the Volatility Index curve starts to re-invert to an upperly sloping formation.
He expanded that US equities and the Volatility Index hasn't been pricing in the Brexit outcome. In particular, the floor for the Volatility Index has "shifted to a new higher level for some time but I think it's going to stay there."
"There is just to many long term implications," he further emphasized.
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