I haven’t said much about the Russian invasion of Ukraine as I believe one cannot predict how it is going to unfold or for how long. I also believe that the underlying trends of the stock market are what are important when it comes to it and that is what we must keep our eyes on. One thing that has happened, though, is that the Russian stock market has been destroyed. The stock exchange in Russia has been closed all week, Russian ETF’s and ADR’s that trade in the US have collapsed, and the London Stock Exchange is going to delist Russian stocks next week.
Traders in Russia know it’s all over for them. Look at this clip from Russian TV.
This is what is happening to the stock market in #Russian #stockmarkets https://t.co/J6h2e03cRV
— Mike Swanson (@tradermike_1999) March 3, 2022
Stock market investors around the world have also been taking losses. Their markets have not been destroyed, but they fallen into full blown stage four bear markets. This was going to happen at some point anyway as the global bond market peaked out over a year ago and it was only a matter of time that falling bonds and inflation caused most stocks to go into decline. Commodities are winning and so are investments and companies that benefit when inflation goes up.
We tend to focus on the US market, but look at what is happening now to markets all over the world.
Here is the EWG ETF for Germany.
A stage four bear market happens when a market trades below its 200-day moving average and that indicator acts as resistance.
That is also happening with China.
And with Japan.
I could go on and on.
But this has to do with more than just Ukraine.
It wasn’t just an American bond market top that happened last year, but a global bond market peak that happened. When bonds go down in value yields go up, which increases the costs of companies to take on more debt.
Most people are not adapting to this and are just trying to buy the same old fad winners that are now in bear markets trying to guess a bottom, not looking at the larger trends, and only putting their eye on the daily gyration they see on their apps.
Focus on what is in a stage two bull market now.
Commodities are soaring, as you can see from this ETF, which closely trades with the Commodity Research Bureau Index.
It isn’t 2020 anymore folks when it comes to trading.
Cathie Wood was the guru of yesterday and her ARKK is sinking.
When it comes to the financial markets we are experiencing a mish mash combination of the 1970’s and the summer of 2000 market top.
In war one must adapt to survive.
The same thing goes for people in the financial markets.
-Mike
