A Glimmer Of Hope (Technically Speaking For 3/8)

Stock Market


Bull and Bear Symbol with Stock Market Concept.

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The US banned Russian oil imports.

President Joe Biden said the US will ban imports of Russian fossil fuels including oil, a major escalation of Western efforts to hobble Russia’s economy that will further strain global crude markets.

“The United States is targeting the main artery of Russia’s economy,” Biden said Tuesday in Washington. “We will not be part of subsidizing Putin’s war.”

At this point, I do not see how the Russian economy can function in any modern sense of the word.

There are strong price spikes in several markets.

Wheat:

Wheat futures reached unprecedented highs on Tuesday, highlighting the severe fallout for global food supplies from Russia’s invasion of Ukraine.

Most-active futures in Chicago leaped to $ 13,635 a bushel at the start of the trading session, representing a stunning 77% gain in the staple grain’s price this year.

Gas at the pump:

The average price that Americans are paying for gasoline at the pump has risen by almost 50 cents per gallon from a week ago and stands at more than $ 4 per gallon, according to GasBuddy data covering more than 150,000 gas stations across the country. The average is nearing the highest level recorded by GasBuddy: $ 4.10 in July 2008.

Nickel:

Nickel, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days to trade briefly above $ 100,000 a ton early Tuesday. The frenzied move – the largest-ever on the LME – came as investors and industrial users who had sold the metal scrambled to buy the contracts back after prices initially rallied on concerns about supplies from Russia.

I’m stunned at how quickly events are moving right now.

Credit default swaps for Russian debt are soaring:

The cost of insuring Russia’s government debt rose to a record high after President Vladimir Putin signed a decree allowing it to repay foreign creditors in rubles, raising concerns about the prospects of a default across the country’s $ 33 billion of dollar bonds.

Credit-default swaps insuring $ 10 million of the country’s notes for five years were quoted at about $ 5.8 million upfront and $ 100,000 annually on Monday, signaling around 80% likelihood of default, according to ICE Data Services. ICE is the main clearing house for European CDS. The upfront cost that protection sellers demanded on Monday rose from around $ 4 million last week.

This harkens back to 1998 when Long Term Capital Management nearly collapsed due to the devaluation of the ruble. For more on that, see this link. LTCM was heavily leveraged (at a rate of 30 to 1), greatly exacerbating the crisis. Hopefully, no one out there has been that stupid this time around.

Today, let me offer this glimmer of hope and note that we could be seeing bottoming formations on the SPY, QQQ, and IWM.

1-year, 6-month, and 3-month SPY

1-year, 6-month, and 3-month SPY (Stock charts)

The SPY may be forming a double bottom.

QQQ 1-year, 6-month, and 3-month

QQQ 1-year, 6-month, and 3-month (Stock charts)

The QQQ may be forming a double bottom.

IWM 1-year, 6-month, and 3-month

IWM 1-year, 6-month, and 3-month (Stock charts)

The IWM could be forming a triple bottom.

This is a very preliminary analysis based entirely on the chart data alone. The economic and geopolitical backdrop is now so chaotic that getting a firm read on market direction is very challenging right now.



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