With the Comey drama behind us for now (there are still a number of investigations and even more speculation of what might have been said behind closed doors after the public session), investors can concentrate on fundamentals.

Of course, there was another wrench thrown into the mix overnight with the surprising election results from the United Kingdom.   To effectively run the government, a party must garner 326 parliament seats or form a collaboration to come to that number or higher.

Last night, no party won a majority, and so it appears British Prime Minister Theresa May will form a government with the DUP.

• Conservative 318
• Labour 261
• SNP 35
• Liberal Democrats 12
• Democratic Unionist Party 10

This move means she will govern, but the fact is, she was a major loser last night, and many believe it’s the end of her career.  With that, one has to wonder if the populist/nationalism movement has also come and gone in a whimper.

Ironically, the DUP is a nationalist populist party decidedly anti-Euro but are on record saying they prefer a “soft” Brexit.

It’s going to take some time to understand the ramifications, particularly in the United States, but the wave that was going to swallow Europe has fallen flat for the moment.  The mood shift in the west hasn’t faded, and voters will probably continue to mete swift changes if they can’t get swift changes in their own personally lives.

Broad Market

There are several narratives in the market, but the overarching investment theme is the runaway breakout.  Stocks and indices moving into all-time high territory on strong volume is what I call “true breakouts” and often are runaway breakouts.   Meaning, the upside never stops.  (Of course, it does, but not after mind boggling moves.)  Think NVIDIA, think the NASDAQ composite. 

Right now, all the major indices are at a point of runaway breakouts, including the Russell 2000, which has been largely sideways since its initial post-election pop.   The index is coming on right now, and while I have a hedge to the downside, a close above 1420 on strong volume might be the ultimate short term buy signal.

I’ll have more on the afternoon note, but we are nearing a point where the market is going to make a dramatic move.  While all signs point north, like those polls that said Theresa May was going to crush it last night, technical work also underscores that failed breakouts can lead to pullbacks.