S&P 500 falls below 2,000 as fear returns
The Ukraine crisis festers and other fresh concerns boil to the surface, knocking down markets and giving volatility some life.
By Anthony Mirhaydari
Some fear returned to the stock market on Thursday and the Standard & Poor's 500 Index ($INX) dipped back below 2,000 on growing evidence that Russian forces have moved into Ukraine with significant military assets.
NATO released satellite images of what it identified as Russian artillery battalions cross the border and setting up offensive positions against Ukrainian forces.
And after the close, President Barack Obama said Russia's "ongoing incursion" into Ukraine was responsible for the violence there and that the latest events would bring "more costs and consequences for Russia."
This comes as the summertime lull looks set to end (traditionally, after the Labor Day holiday) with stocks looking vulnerable perched at new highs (barely) amid collapsing volume and fresh signs of concern.
Investors need to take notice.
The CBOE Volatility Index ($VIX), or the VIX -- Wall Street's "fear gauge" -- is testing back over its 50-day moving average as it looks ready for its first significant uptrend since July. And high-yield junk corporate bonds, the hinge on which the market turned lower back in July, is stalling at its June highs and looks set for a reversal lower.
Investors have enjoyed calm in the market over the last few weeks as the economic data, especially on inflation, diminished what had been a big bugaboo in late July and early August: the specter of sooner-than-expected interest rate hikes from the Federal Reserve.
And while this issue has been moved to the back burner for now, fresh concerns are boiling up.
The situation in Ukraine looks ready to escalate has Moscow has little option but to more forcefully intervene in Ukraine now that pro-Russian separatists in the east have suffered a series of military defeats and have been knocked back on their heels.
But there's more.
Political risks are on the rise heading into the November midterm elections, setting the stage for another round of contentious budget battles between the White House and Congress of a type we haven't seen since 2012. The Fed's QE3 bond purchase stimulus is set to end in October, leaving the market without a steady flow of cheap money for the first time since 2012. Prior periods of no Fed purchases in 2010 and 2011 were accompanied by periods of market weakness.
And finally, the last few days has seen expectations rise for next week's upcoming European Central Bank policy meeting. The risk of disappointment is high as the ECB legally isn't able to launch the type of Fed-style QE bond buying program, despite growing expectations that such a program is imminent as Europe struggles with deflation and unemployment.
Fresh opportunities are appearing in defensive assets, with precious metals in particularly looking ready to benefit from the fresh wave of fear. The iShares Silver Trust (SLV) is cutting up and out of its tight two-month downtrend channel.
In response, I've recommended the VelocityShares 3x Long Silver ETN (USLV) to clients. If you're less aggressive, the unleveraged SLV would be a good choice.
With trading volumes set to rise to more normal levels after the long holiday weekend, Thursday's pullback could be a preview of a bumpy September for a comfortable and complacent stock market.
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Keep Barry on the golf course and let the pros take care of global relations
To all the commentators ...........at least you take the time to be heard but who is listening?? It surely is not our elected officials, major television network owners, or big business. Before the internet and venues like this one the American public had no ability to voice our feelings.........we were kept in the dark and ignorant.......maybe we were better off?.........of course not!
If the American public really wants to be heard.........STOP WATCHING MAJOR NETWORK NEWS, especially those morons on CNN. What do we expect the rest of the world to think of America when most of us are addicted to idiotic reality TV programs and other day-time stupidity like tabloid television.........thanks for starting this crap Jerry Springer!..........
This rant may not seem to have anything to do with this MONEY article.........but it does! Why?
Because we feed the Billionaires like Soros by being zombies in front of the damn TV.
Think about it folks!
Finally, yes all your comments have varying degrees of validity but purporting the Apocalypse of America doesn't help.........What will help is when each of us take control of our own lives and stop letting major network television lead us around by our noses.
Instead of investing from their vast Energy Resources in preparing for this well known coming showdown for over a decade, Putin and other Russian leaders have clearly ill prepared there Nation for what has happened. If Putin actually knew what he was doing, the almighty Dollar wouldn't still be the World's ultimate Reserve currency. If Putin actually had a clue, he would already have had alternate plans in place to prevent any sanctions from controlling what moves he must now make.
Putin is as trapped as are the Central Banks. The Euro-Zone can't afford another Crisis. However, This isn't our Fight, let Europe solves their own problems. They want our Corporations to base there instead of HERE. Well they can then fight their own battles and FUND them as well. We can use the cost savings and start investing in America.
Concerning Fear returning, say that when see 300 point down moves continually in the DOW. Right now, it's hardly a Blip on the Radar. Fear is returning, where. When it truly does come back, it will be of Epic proportions.
Google " Gold Trading Academy ", it's about trading oil, you won't regret it, these guys are doing it right by me.
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As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
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