US stock indices are sitting at major long-term support levels:
You can see that the S&P 500 is at its Jan. 24 low. It is crucial for the index to bounce off this level, or else it essentially confirms stocks are in a full-blown downtrend characterized by lower lows and lower highs (as opposed to higher lows and higher highs).
The Nasdaq is in the same situation:
The Nasdaq needs to bounce off these levels or else it will probably go into freefall and settle around 12,000. That would equal about a 26% drop from its November all-time high.
The NYSE index is sitting on major long-term support:
The NYSE has been clinging to this support level for dear live over the past year or so, and as you can see it bounced off it last May, June, July, September, October and January.
Almost the past year, this has been the buying zone for the NYSE–the level that bulls will step in to reverse the market’s decline. This 16,000 level is absolutely crucial.
Things are brutal out there in the markets. It’s way worse than the major indices let on.
We’re at the point now where even Apple and Microsoft are starting to falter. AAPL is down over 12% from all-time highs, while MSFT is down 19.5%, a half-percentage away from being in a bear market.
These are two of the four Titans of the Stock Market, the only companies really keeping markets advancing–or, I should say, keeping them from totally collapsing. Google and Amazon, the other two Titans, are down 15.5% and 22.8% respectively.
And Facebook? Now down 48% from its peak, with nearly $500 billion in market cap simply vaporized.
Tesla is now down 38% from its peak, and Elon Musk is railing against the SEC while his company’s stock craters. TSLA was down 7% today. Once the real TSLA carnage begins, everybody’s ruined.
My spreadsheet of over 800 stocks shows that 52% are now in a bear market, the median decline is now over 20%, and the average stock I track is now down over 25%. These stocks represent, in the aggregate, over $44.3 trillion in market cap. But they used to represent over $47 trillion in market cap as recently as a few weeks ago.
The Nasdaq index is down over 19.3% as of today’s close.
Things are very bad right now.
And we haven’t even gotten into the headlines. All via Bloomberg:
US WARNS UKRAINE OF FULL-SCALE RUSSIAN INVASION WITHIN 48 HOURS – SENIOR OFFICIAL TO NEWSWEEK
UKRAINE PARLIAMENT VOTES TO APPROVE STATE OF EMERGENCY
U.S. HAS INDICATIONS THAT RUSSIA PLANS TO USE ITS MILITARY RESERVES AND NATIONAL GUARD, SUGGESTING LONG TERM GOALS IN UKRAINE- OFFICIAL
RUSSIAN FORCES ARRAYED AROUND UKRAINE ARE AS READY AS THEY CAN BE, 80 PERCENT IN FORWARD POSITIONS, READY TO GO – U.S. DEFENSE OFFICIAL
LEADERS OF TWO SEPARATIST REGIONS IN EASTERN UKRAINE HAVE ASKED PUTIN FOR HELP IN REPELLING AGGRESSION FROM UKRAINIAN ARMY -IFAX CITES KREMLIN SPOKESPERSON
DESTRUCTIVE MALWARE CIRCULATING IN UKRAINE HAS HIT HUNDREDS OF COMPUTERS -ESET RESEARCHERS
As for markets:
FED’S DALY: THE GEOPOLITICAL ENVIRONMENT IS PART OF A WIDER UNCERTAINTY TO NAVIGATE, BUT IT’S NOT DELAYING LIFTOFF PREPARATIONS.
FED’S DALY: MOST LIKELY IT WILL NEED MORE THAN FOUR RATE HIKES
JPMORGAN: OIL PRICES WILL AVERAGE $110 IN THE SECOND QUARTER.
WHITE HOUSE SAYS RELEASING MORE OIL FROM STRATEGIC PETROLEUM RESERVE IS AN OPTION ON THE TABLE
It’s an absolute bloodbath out there.
The only good headlines to come from today, in my view:
WHITE HOUSE SAYS BIDEN HAS NO INTENTION OF SENDING U.S. TROOPS TO FIGHT IN UKRAINE
*TRUDEAU TO REVOKE EMERGENCY POWERS, CANADIAN PRESS REPORTS
But the good headlines were far outweighed by the bad.
As I have been telling you, the Fed cares more about inflation than it does your precious stock portfolio. And lest you think the looming war in Ukraine will cause the Fed to change its mind, the opposite is actually true: with oil prices spiking, inflation is actually now more of a concern for the Fed.
The Fed will hike rates into a slowing economy if there’s inflation. It absolutely will. It did so in the early 1980s, and it will do so today.
The Fed can only ease and keep rates low if inflation is under control. The Fed will not cease until inflation is under control, and as such the stock market will continue getting rocked until inflation is brought down to a stable and reasonable level.
People who don’t realize this are about to learn the hard way what the Fed’s true priorities are.
Let’s get back to Ukraine, though.
Russia is currently sending warning text messages to Ukrainian troops stationed in Eastern Ukraine:
It certainly seems as if Russia is about to invade, and that they are not fucking around.
But let me get into what this truly means in the grand scheme of things.
For more than 30 years, all the US government had to do was say the word, and its will would be done.
“Join us as we invade this country.”
And they would have a Coalition of the Willing right behind them, ready to place boots on the ground.
“Don’t invade that country,” the US would sternly demand the Russians or the Chinese.
And that country would not be invaded.
But now this world order no longer exists.
The US and its NATO allies firmly demanded of Putin: “Don’t you dare invade Ukraine.”
But he didn’t listen.
We are now living in a multipolar world, where the US no longer has unchecked dominion over the whole planet.
Putin now sees that the opportunity is ripe for him to assert himself as the true master of Eurasia.
He is not afraid of America.
Due to actions taken by Putin over the past 8-10 years or so, Russia is now less financially reliant on the West than ever before:
Russia now has a public debt-to-GDP ratio of just 18%.
Russia’s US dollar holdings now represent the smallest percentage of its total FX reserves than at any time in at least the past 16 years.
Europe is reliant on Russian gas exports.
It’s a whole different situation out there.
Dr. Fly elaborates in typical Dr. Fly fashion:
Russia is sick of America’s bullshit and is using our CRT/LGBT chasm of weakness to advance their internal goals. We have never been weaker as a country, so they figured “fuck it, let’s sack Ukraine.”
Toothless and defenseless Europe now finds themselves in the unfortunate position of having to FREEZE and STARVE to death due to their reliance on Russian wheat and gas. They cannot fight against Russia — because all of the men of Europe have been replaced by trannies (I realize I am coming across as a reprobate).
As Russia has us by the nuts, China will extend their cocks into Taiwan and then we shall really see tumult.
…
You can sanction Russia all you want. Russia’s tiny economy holds all of the natural gas, oil, and also wheat, so also enjoy starving to death. I do not say this with malice, but only find it amusing how fucking stupid the Europeans are for getting checkmated like this so hard.
On top of that, Ukraine is the “bread basket” of Europe, leaving a panic in the commodity pits now with prices of wheat soaring to new highs.
We now live in a multipolar world.
The word is out that the US no longer runs the show.
Russia, China and many other countries have been waiting for this moment for a long time, and now the moment has arrived.
And this situation in Ukraine is only the beginning–other countries will now use this opportunity to do the things they have always wanted to do, and it’s possible that China seizing Taiwan is on deck, as Dr. Fly so eloquently suggested.
China, who has until now been mum on the Ukrainian matter, has just today broken its silence, and guess whose side they’re on? Russia’s side.
Beijing — China on Wednesday accused the United States of “raising tensions” and “creating panic” over the Ukraine crisis, shortly after Washington announced new sanctions against Moscow and said it would continue to supply weapons to help bolster Ukraine‘s defenses against a potential Russian invasion.
Beijing has trod a cautious line on Ukraine as Moscow has massed thousands of troops along the neighboring nation’s borders. China criticized the West for imposing more sanctions after Russia ordered troops into two breakaway Ukrainian regions that Moscow now recognizes as independent.
President Joe Biden earlier stressed that the penalties were only a “first tranche,” adding that more sanctions would come if Russian President Vladimir Putin extended his country’s military grip beyond the two territories in the eastern Donbas region.
China and Russia have grown closer in recent years as they’ve become more estranged from the West, and more at odds with the U.S. Earlier this month, Putin traveled to Beijing and met with his Chinese counterpart Xi Jinping as the Russian leader massed forces around Ukraine’s borders.
On Wednesday, China lashed out at Washington over the new sanctions against Russia and said it was raising tensions by sending weapons to Ukraine.
Because this is CBS News, they characterize China’s statement as “lashing out,” indicating irrational and baseless rage. Of course, Biden’s saber-rattling was not characterized as “lashing out.”
The U.S. actions were “raising tensions, creating panic, and even playing up the schedule of war,” foreign ministry spokeswoman Hua Chunying told reporters.
“If someone is adding fuel to the fire while blaming others… then that behavior is irresponsible and immoral,” she added, turning the spotlight on the United States in response to a question on China’s role in resolving the situation.
She said China had “called on all parties to respect and attach importance to each other’s legitimate security concerns, strive to resolve issues through negotiation and consultation, and jointly maintain regional peace and stability.”
Asked if China would impose sanctions on Russia, Hua added that Beijing believes “sanctions have never been a fundamental and effective way to solve problems.”
China is firmly on Russia’s side.
It’s over. The US’ run of dominance over world affairs is now finished.
We are living through the birth of a new era in world affairs.
And, at the same time, the US stock market is on the verge of collapsing.
Now, it’s possible one could read all this as a contrarian buy signal, and that we are now at the point of maximum panic and despair in the markets. It’s possible that’s true. It’s possible that this is a great opportunity to buy stocks at a discount and bank on a rally.
But with the Fed preparing to hike and cease the easing, I wouldn’t.