The Upper Hand

The major stock market averages are down about 3% three hours before the close. Yesterday's British referendum to leave the European Union ("Brexit") has injected a huge dose of uncertainty. Normally, your humble small investor would view the current circumstances as a buying opportunity, but the problems may well extend beyond the impact on Great Britain.

According to British WSJ columnist James Mackintosh we can foresee either a short correction or a "rolling crisis": [bold added]

If the world sees Brexit as a cry of anguish from a small island somewhere to the northwest of the world’s biggest trading bloc, then the market correction elsewhere could be nasty and brutish, but short.

As a British passport holder I tend to think an impending disaster for the world’s fifth-largest economy could be the next round of the rolling crisis that started with U.S. subprime, crushed Lehman and then the eurozone before flattening emerging markets. Each showed the weaknesses in the global economy, and prompted proper arm-waving panic before central banks got them under control. I may be biased, but it feels as though there could be a lot further to fall before the central banks can stabilize markets.

The market is driven by both fear and greed, and fear is holding the upper hand.