Sunday, March 02, 2014

Ukraine risk?

Ultimately, the Ukraine crisis means very little to American stocks and bonds, but sometimes traders like to use any possible crisis as an excuse to push stocks down, even if they eventually bounce right back. Treasuries could rise a little as some people see a safe haven.
 
Flip a coin as to whether the markets react significantly to the Ukraine crisis this week. There's at least a 50/50 chance that any reaction will be short-lived and quickly be reversed. And if there is any significant dip at the open on Monday, it could quickly reverse and result in a significant bounce.
 
If futures are down sharply just before the open, I would then expect for stocks to see a loss at the open and then recover somewhat for the rest of the day.
 
If futures are down sharply early and then recover much of that decline, I would expect the market to open without too big a loss or even a modest gain, but then decline moderately through the rest of the day.
 
If futures are fairly tepid for most of the early morning, I would expect the market to behave as if Ukraine was not an issue, IOW, just as it did on any given day last week.
 
In short, there's no good reason to expect a major market decline due to Ukraine, but traders and short-term speculators are not known for taking the long view when sentiment is sour.
 
Actually, I hope there will be a significant dip – to give me a cheaper entry price for the new positions I will be opening over the next couple of weeks for my 2013 retirement contributions. I'll do a couple of buys on Monday, and then continue that pattern all week.
 
Shaeffer's Research will come out with a new Weekend Trader option recommendation at 7 PM on Sunday. That will be one of my Monday trades. I'm in the middle of a one-month trial of that service.
 
-- Jack Krupansky

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