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Our View
You would have thought yesterday was an FOMC day or CPI day with the way the market traded following the 12:40 comments from Jerome Powell.
The market initially spiked, then puked 76 handles before reversing and taking out the high. Everyone’s going to be talking about Powell and the Fed this morning, but there is something else I want to talk about. It's Putin's war in Ukraine.
Despite what we read in the US, Ukraine is getting its ass kicked. They say soldiers on the frontline have a 4-hour life expectancy. I have always said that 1) Putin was not going to sit by and watch his military get steam-rolled and 2) that something big is going to happen in 2023.
Well it's already happening. Feb 24 is the one-year anniversary of the invasion and there is speculation that things could get much worse. The new Russian buildup has already commenced as it readies for another push. Not only is Ukraine outnumbered, they are out gunned. Moscow is intensifying its assault and loss of life is only going to increase.
Ukraine says it has 250,000 boots on the ground, but I think the real number is around 200,000. On the Russia side they say 280,000 on the ground with another 150,000 to 200,000 being recruited or on the way.
The other problem with Putin? His access to nuclear weapons. It doesn’t mean he’ll use them, but you can’t be 100% sure that he won’t.
So what does all of this have to do with the stock market? While US stocks can continue to climb, I don’t think it’s going to go flying back to new highs right now. There is just too much risk floating around — Russia being one of those risks — and sadly, as I said earlier, the next six months in Ukraine are going to see a lot of death and carnage.
Our Lean
Yesterday was a tough day in the market, with those wide trading ranges. Really, you have some traders who made an absolute killing and others who were crushed. Many ended up being chopped one way, then chopped another.
We did get some nice feedback yesterday about our 4100 “buy zone” call, especially the way it regained the prior day’s low — so thank you to those who reached out about that.