Can we really put the Russia/Ukraine issues behind us already? I hate to be a doubter or cynical on this issue, but I am not going to believe Putin will stop this easily. Regardless of what I think the markets believed it today as the broad indexes all climbed higher on the day. The Russell 2000 Small Cap index led the upside gaining 2.6%, the NASDAQ was higher by 1.7% and the S&P 500 index added 1.5%. After declining on fear over the military advances by Russia over the weekend, today rebounded and hit new highs for the majority of indexes. All is good and full speed ahead… right?
The global markets joined the US as Europe was up 2% and the EAFE index was higher by 2% as well. There is plenty of concern relative to the international growth outlook, but for now the buyers are willing to step it up somewhat. The emerging markets gained 1.7% as well on the day as all the global markets experienced positive sentiment. We will still take it one day at a time until the trend solidifies on the upside or the downside.
With today behind us, and looking forward how will investors deal with the news? The S&P 500 index hit a new high today, which begs the question of if investors will continue to buy at these levels? How high do stocks get pushed and who will be the fall guy when they pull the rug out from under this propped up mess? I don’t like news driven markets as they tend to not end well for investors in either direction. Tomorrow will hold plenty of interest as the ISM Services data is released, and more importantly, will we get a follow up to today’s emotional move in response to Russia “standing down”? It promises to be interesting.
Telecom, Transports, Europe and EAFE were the leading sectors up more than 2% on the day. Utilities and Energy were the laggards up on 1% for the day. There were not any changes overall other than the direction. The upside transition was not expected in trading today until Putin made the move relative to the Russian Troops. That sent the futures up 0.7% overnight and then climbed to better than 1.1% by the markets open this morning. As we have been saying… you take what the market gives and keep moving forward. Today reconfirmed the uptrend, sent the indexes to new highs, restored the positive sentiment and sent the VIX index back to 14. Tomorrow is another day of trading and we have to be patient and see what is in store for us.
All that was negative on Monday is positive on Tuesday. Erase the last couple of trading days… go back to the weekend notes and start as if tomorrow is Monday and put into play what was outlined. If Russia changes their mind overnight all bets will be off again. Either way we will take what the market has to offer and for today that is the upside. Set your stops at the level of risk you are willing to take and keep looking forward.
I will have plenty to cover in the morning notes for the trading day… see you then.