Russia, oil and uncertainty drive markets lower

Nice opening rally off the early lows for the broad markets as oil prices rose above the $56 mark. However, the good news was short lived as oil turned lower and the markets joined in only to forfeit all the early gains. The market is centrally focused on oil prices for now and what it may mean for the economic outlook in stock prices. In most circles that is know as speculation as not one know for sure how this will play out and who or what will happen going forward. For now cash is looking good as the stops hit continue to raise our cash positions.

One benchmark for the uncertainty is the rotation of money to safety. A quick look at TLT, IEF or TLH gives you a good look at money moving to treasury bonds. How this unfolds near term is up to the speculation more than the fundamentals at this point. Follow the money it always leads to the leaders short term.

The NASDAQ was the biggest loser on the day dropping 1.2% and the NASDAQ 100 index fell 1.6% as the large cap stocks were vacated with the pharmaceuticals and technology stocks leading the way lower. The chart below shows the drop in the broader index to 4547 and below the 50 DMA on the close. This break the second level of support and confirms the downside. As we all know bad news leads to faster selling and if the momentum continues this could erase the gains from the move off the October low. QID has been the hedge to own or trade to make short term.


The S&P 500 index closed at 1972 adding to the downside break of the 2018 mark on Friday. Energy, basic materials, telecom and industrials are leading the downside, but financials, healthcare, consumer services and technology are joining the forces on the downside. 1967 is the next support level and based on the willingness to dump stocks currently it should not take long. Watching for a base of bounce before we take on any additional risk in the broad markets. SDS remains in play.


The Russell 2000 index attempted to lead on the upside, but in the end failed to hang on to a solid move higher. The index is still at the 1140 mark and looking for some help on the upside short term, but that has not materialized. Watching to for the index to provide some leadership if the bounce is going to show up. The break higher today held until the end of the day sell off. This could get interesting tomorrow. Break lower is bad sign for the markets near term.


The Volatility index jumped to a high of 25.2 Tuesday and showed the worst may not be over yet.  The more the media hypes the issues with Russia, the threat of default and economic impact, investor worries will only continue to grow and the market will find more downside opportunities than up. VXX still in play. Manage your stops accordingly.

This is a sellers markets currently as each bounce is met with more selling. The dump is on and this could get worse before it gets better if the price oil continues to tumble short term. Manage your stops, raise your cash and look for the next opportunity.