The Dow Jones gapped down at the open to the tune of -130 points. Raising the question if the potential war in Ukraine and the continued escalation of tension between Russia and the US will be enough to set off a large bear market move. Based on my mathematical timing work the answer is YES and NO. The gap we see at today’s open is likely to be closed. Either today or over the next few days. It is my belief that the market will settle down to continue it’s present trend, but not for too much longer. While the trouble in Ukraine could be blamed as the catalyst that sets the upcoming bear market off, such is not the case. Again, the market is tracing out it’s exact structure. It will start the bear market when the time is right.
When is that time?
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NEW YORK (Reuters) – U.S. stocks were set to open sharply lower on Monday, alongside other risk assets, as Ukraine and Russia prepared for war after Russian President Vladimir Putin declared he had the right to invade his neighbor.
Ukraine mobilized for war on Sunday and Washington threatened to isolate Russia economically after Putin said he had the right to invade Ukraine, in Moscow’s biggest confrontation with the West since the Cold War.
The S&P 500 closed at a record high on Friday, and profit taking was expected on Wall Street due to the political uncertainty.
“There’s been a very significant rally,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.
“If you need an excuse to sell, this is a good one.”
Russian stocks and bonds fell sharply and the central bank hiked interest rates to defend the ruble.
Energy stocks could stand to lose if relations between the United States and Russia deteriorate further. Volatility will likely spike alongside the uncertainty of the situation.
“Anything that involves a boycott of Russian supplies, which are very significant, could impact the energy sector dramatically,” said Meckler.
“In situations like this you see very quick reactions reverse as people understand the scenario and how things play out.”
S&P 500 e-mini futures fell 17 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 130 points and Nasdaq 100 futures lost 34 points.
Gold prices hit a four month high as investors sought safe-haven assets, boosting gold stocks.
Though the focus will likely remain on Ukraine, the economic calendar is full on Monday.
U.S. consumer spending rose more than expected in January, likely as chilly weather boosted demand for heating.
Will The War In Ukraine Collapse The US Financial Markets? Google