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Friday, February 25, 2022

Market Update Feb. 25th, 2022 - Yesterday's Whipsaw Action in Commodities and Equities Explained

Reviewing yesterday's massive reversal in Oil, Gold, and Equities 

 I love it when the lame stream media points to a massive intra-day reversal - like the one we saw yesterday - and is left speechless. That dumb look on their faces is priceless! Surely, if they understood what was happening in Ukraine, or if they decided to turn over a new leaf, and be totally honest about it - for a change - they could come up with an interesting story, that people would wait on the edge of their seats for, but sadly the folks who's job it is, to read teleprompters all day, aren't the sharpest tools in the shed, and it's no wonder most retail traders - who rely on accurate reporting - are left scratching their heads. 

Firstly, the MSM (main stream media) continually tries to demonize Russia, while trying to protect the democrats, and that political bias stands in the way of honest and accurate analysis. 

All day every day they reported the same damn thing: That a "Full Scale Russian Invasion", was under way. 2, and that President Biden was going to address the nation at 12:30 noon EST, which ended up being postponed an hour, maybe because it conflicted with Crazy Uncle Joe's, nappie-time?  

 Anyhow, all this MSM driven media hysteria triggered algorithmic trading programs, and traders alike, to price in every kind of Russian sanction imaginable. 1. Oil 2. Gold. 3. Aluminum. After all, Oil sanctions were supposed to be imposed only if Russia launched a "full scale invasion", and now you know why this was reported no less than 100 times by CNN.    

Well, as it turned out Russian sanctions did not include any of the above, and the market reacted, with a sharp reversal, and what I can only describe as an explosive short covering rally. Of course the millennial behind the screens, who feed the teleprompters all day, don't recognize it as short covering, so they call it "dip buying".


In hindsight it totally makes sense that if Oil is up because of sanctions, against several oil producing countries, than if we're going to sanction Russia, then Oil is going to continue higher, but the bulls also had this psychological target of $100, which was dumped like a hot potato. No surprise, since that target has been broadcast 1000 times by the financial lame stream media, over the past month. Now the MSM acts surprised, when they see that target sold? This is a new level of stupid.  

Another thing the The MSM continues to ignore the fact that Iranian Oil is coming back on line. 

"And that's the rest of the story", quoting Paul Harvey 

To the Charts 

We saw the $VIX jacked above 35 at yesterdy's open, just as I had predicted, but that was swiftly hammered back down. It was at that point I started updating the charts, and calling out bullish trades all over the place, including Russia. 

$RSX - see Russian sanctions priced in for nearly 3 months. See the green arrow I finally added at yesterday's open. This morning the candle doesn't look as much like a "doji reversal", as it did when I annotated the chart, but it was a good call nonetheless. It opened at the lows of the day, and closed at 15.39, so do the math.... it was a way bigger snap-back rally than we saw on the NASDAQ. 

Will the MSM report on Russian stocks rallying, or the bottom in the rubel? Hell no! 

I told you which levels to watch on the $DAX, yesterday, so you should know it's back above support. 

The chart patterns have changed somewhat   

We've been trading in a sideways range, for nearly a year, but yesterday's selling broke some of the charts. Is it relevant, or just another attempt to shake out all but the most sophisticated of technical traders? I can't say for sure, but I deleted many broken charts yesterday. 

 $NYSE - because the crooks on Wall Street like to manipulate the $SPX more than any other index, I chart most every other major index. The New York Stocks Exchange ended in the red, unlike the heavily manipulated $SPX, by the way. 

$SPLV - The Low volatility $SPX also ended in the red. 

Most the longer term charts look fine - not broken  

$WLSH Wilshire 5000 - gave back all the gains of the past year, so I'm glad I stuck to my guns, and remains bearish all through most of 2021, in the face of all of CNBC's false reporting. I win! 

Judging by yesterday's action, I think there's a good chance we're going to see tech continue to lead, but I can't say we're out of the woods yet. 

For now $VIX 35 is resistance on the fear gauge. We could see a couple sectors retest the lows. Volatility is still super high, but as long as the $VIX doesn't breakout to new recent highs, then I think the worst is behind us. 

I covered my energy shorts, basically because I can't sit in a leveraged ETF that isn't performing, day after day. I did add to my Oil short, and looking to get short Nat Gas, or even gold miners, if they go higher. I think Russia is going to pull out of Ukraine, as fast as they went in, once they prove their point - that they aren't going to allow weapons of mass destruction to be placed on the porch of their house. 

A couple more charts 

$SOX - technically trend remains lower despite yesterday's little breakout... 

$XLC - Tech will probably lead the market higher as usual, as it did yesterday.  

Oil can snap back today, after yesterday's beating  

Take Care, and good luck next week. 

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