SPX 5-Minute Chart Market Sell Off and Recovery on Ukraine Troops Attacking Russia Military Inside Ukraine

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 stock market recovers all afternoon with the indexes travelling back to the flat line after a wild roller coaster session of up, big down and up. The business channels are focused strongly on the Ukraine-Russia military battle news but the regular cable news outlets do not report the story and instead focus on the St Louis race riots. The laissez-faire reaction to the bombshell news that Ukraine and Russia may be at war causes the stock market to lift. If the regular news channels are not running the story is it even true? Doubts emerge that perhaps the Ukraine troops may have fired on a pro-Russian military convoy and not actual Russian military vehicles and troops. The story loses a hair of credibility so markets recover into the closing bell. Traders repeat “Mad Magazine’s” Alfred E. Neuman’s famous tag line; “What? Me Worry?”

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.