Yesterday, the news of Russia building up its forces on the Ukrainian border, along with China telling the world once again it is growing too fast and it needs to slow down, sent the stock market reeling, or so the news told us. This morning, the market opened in the green, but it is now in the red just a smidge. China and Russia are still in the news, so are we to conclude that the market will be down another 200 points today?
- Russia shipped more troops and armor into Crimea on Friday and repeated its threat to invade other parts of Ukraine, showing no sign of listening to Western pleas to back off from the worst confrontation since the Cold War.
- China’s combined industrial output growth slowed to 8.6 percent on year in January and February, below a forecast for a 9.5 percent rise and a previous reading of 9.7 percent.
Maybe the market will tank today, but, if it does, consider it a buying opportunity, as the news about China and Russia will soon be stale. Now, if Putin actually invades Ukraine, that will be a horse of a different color. The market will drop far and fast. We will have to wait patiently for the bottom, but it will come soon enough, as Russia invading Crimea is more a matter of perception for the markets than it is any financial or economic problem. If I were to go out on a limb, though, I would say Putin is all bluff and bluster, as he faces a real financial, economic, and political disaster if he orders an all-out assault.
- Russia’s stock markets tumbled and the cost of insuring its debt soared on the last day of trading before pro-Moscow authorities in Crimea hold a vote to join Russia, a move all but certain to lead to U.S. and EU sanctions on Monday
The reason the above happened is the US and Europe are aligned with economic sanctions if he invades. Chancellor Merkel is correct when she says Putin’s militaristic tactics are old school, old school all the way back to the last century. In today’s world, the tools of war are financial, technological, and political. Although less deadly, the three weapons can be devastating …
Keep in mind what I wrote yesterday – the market is always rebalancing. Expect an up and down reality for a bit, at least until the muddy economic picture clears up, or Putin invades, or not, or China economically heats up, again. Consider the market normal for now.
- Corrections and stumbles are normal, and rarely do they end a bull market.
Currently, we are in no-man’s land, economically speaking, but that will change. In the meantime, what’s up with a statement that the market is more concerned with technicals than it is with fundamentals?
- Heck, after a day like today [yesterday], we can probably even expect something of a dead-cat bounce on Friday or Monday. Such a bounce is likely to be short-lived, however, because of the technical damage done to the market indices on Thursday.
Sure, lots and lots of players play the technicals, which can determine market movement, but is it reasonable to assume that because the market dropped below a technical floor yesterday, it cannot or will not come back and rise higher on any positive economic or geo-political news On Tuesday? As always, we will see …
Oh! One more quick thing – the market turned back into the green. Wait, it is now losing altitude, heading for the read. Up or down? No worries, just buy when the price is right.
Trade in the day; Invest in your life …
