Stocks have a clear path higher after Brexit: Chartist

Ralph Acampora, sometimes referred to as the godfather of technical analysis, believes markets are poised for a big run now that the smoke has cleared on the U.K.'s referendum on European Union membership.

"There was technical damage [last] Friday and Monday" following the U.K.'s vote to leave the E.U., and "I thought we could go a little bit lower," the director of tactical investments for Altaira Limited told CNBC's "Futures Now" this week.

"I was right for about 30 seconds," he joked. Since the global selloff following the Brexit, about 70 to 80 percent of U.S. index losses have been recovered.

"We've had an unbelievable reversal," observed Acampora. "I've been looking at charts for 50 years and this is quite a head fake."

The technician added that the upward movement has been very broad-based, and noted that the low level of bond yields make equities much more attractive. On Thursday, the U.S. 10-year Treasury dipped to 1.45 percent from 1.5 percent, while the German bund yield settled at a new record low of -0.13 percent—a negative yield.

'In the cards for sure'

As Acampora envisions rocky European markets continuing in the future as the U.K. and the E.U. untangle their new relationship, he believes that foreign investors will be drawn to U.S. stocks.

"They're going to come here," he predicted. "We're the best port in the storm when it comes to getting a return."

The analyst anticipates volatility in the coming months, but Acampora is optimistic for equities in the second half of the year—especially following the strong rally that preceded the July 4 holiday weekend.

"Challenging the highs is in the cards for sure," said Acampora in reference to what U.S. equities can do in the coming months.

Overall, Acampora, who has long held a 20,000 target on the Dow, is encouraged by what stocks have to offer given the overall investing environment.

"It's so appealing now to be in equities versus bonds," said Acampora, who believes that confidence has returned following a rocky post-Brexit moment.

Still, he urged caution, and added that, "We're not naïve enough to think we're not going to have some Brexit surprises."

Finally, Acampora observed that the Dow Jones Industrial Average's intraday low on Monday was 17,063 while the S&P 500 Index hit 1,991. He believes these values will serve as a key level in 2016.

"Now, we have a line in the sand under us," concluded Acampora.

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