Everything was going the bull’s way on Friday with traders looking forward to the weekend wanting to sneak out the back door early; however, a
tape bomb spoils the party.
At 10:30 AM, the news wires say Ukraine troops have attacked
Russian troops inside Ukraine. This represents a dramatic escalation of the
turmoil and creates a multi-nation war. A Russian military convoy entered
Ukraine at a different location while everyone was watching the humanitarian
convoy. Eyewitnesses report Russian military vehicles crossing into Ukraine.
Ukraine forces say the Russian military convoy sustains serious damage and now
efforts increase to block the humanitarian convoy due to the escalation of
tensions. The stock market plummets and the bullish day turns sour.
The SPX collapses 22 points from 1964 to 1942, -1.1%, in 90
minutes time bottoming at 12 noon. The Dow drops from 16775 to 16575, 200
points, -1.2%. The COMPQ drops from 4482 to 4427, 55 points, -1.2%, in the
90-minute timeframe. The RUT collapses from 1151 to 1132, 19 points, -1.7%. The
small caps are hit harder which would be expected but note how the broader
market and tech move down uniformly on the news. This indicates that the
headline-reading algorithms were in full control of the downdraft. The VIX
catapults from 12 to 15. European markets collapse with the DAX dropping from
above 9300 to below 9100, losing -1.4% on the day.
Fed’s Kocherlakota speaks at 10:45 AM in the middle of the
stock market selloff (a scheduled talk) and says “inflation will remain subdued.”
Gold is at 1309 not receiving any upside on the Ukraine news since many traders
use gold as an inflation hedge and Kocherlakota says inflation is on a milk
carton (missing).
The red rising wedge pattern forecasts the spank down. The green falling wedge helps create the bottom at noon time. The blue inverted H&S is in play that would send price back up to the 1961-1964 area. The thin red lines show a rising wedge targeting the 1958-1964 area as a potential near-term top. Markets are obviously reacting to the Ukraine-Russia news so the weekend will have to play out. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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