NFTRH+; strategy on this sentiment event

This morning as Putin invades Ukraine markets are doing the all too obvious, cratering in the face of this event. The graphic links to the main headline story.

A disaster is unfolding as a desperate leader tries to reclaim a fragment of his country’s former glory with real people in a real country paying the price. It is terrible and going to get worse.

But our job is to plan for this (as we have) and manage it (as we should). There is a potential ‘buy the news’ play developing. Speaking personally I’d want to think about covering short positions before buying anything, when it appears that relief is coming, either sooner or later. Alternatively, I’d add watch list items of the best quality while holding the shorts as a measure of protection. I’ll really have to see how the US market opens and gauge the tenor of the day.

But this morning the futures markets are only breaking the first significant support levels for ES and NQ. That leaves us with the question of whether the relief will come today and undo the support breakdowns as shown in pre-market or the fear will grind on to the next support levels? It’s a valid question and I guess all that one can do is watch, gauge and wait.

A significant correction or even cyclical bear market had been earned from valuation and sentiment perspectives (over valued sectors have been getting addressed for months now and we had for months on end noted the ‘structural’ over-bullishness of the market).

In this market my goal has been not to lose money as opposed to trying to make money. At some point, that second thing is going to come into play, whether it means a real bear market in stocks and a real bull leg in gold (this sentiment event is driving gold above the 1920 ‘bull gateway’ this morning), or a post-correction reversal upward in stocks, a reaction in gold for example, with several other scenarios possible.

A market in motion is an opportunity; to make money and to lose it. But it’s the ‘in motion’ aspect that is interesting, even exciting. As long as we keep our contrarian thinking caps on straight. Think about the likes of the over-valued Cathy Wood (ARKK) stuff and the remote tools/cloud stuff. One could argue that a bear market has been ongoing since early-mid 2021 and that the ‘captains’ like SPX and NDX are just now getting the memo. The next low could be an important one.

As for gold, I am going to keep my discipline and tune out the carnival barkers the sector will throw at us. Gold is now and has all along been an anchor to value. The speculations associated with it (miners) are the play on that value in a time of upheaval for the broad markets. It could be volatile because the same relief that will one day wash over the broads will also pressure the precious metals (and other items being driven upward by this geopolitical event). But let’s also keep in mind the story of 9/11 and the beginning of a secular gold bull market. The precious metals did not spend the last 1.5 years on the outs for nothing. Let’s keep an eye on gold’s 1920 ‘gateway’.