Investors as a community always react the same to sudden movements in the markets.

Investors as a community always react the same to sudden movements in the markets.

Investors as a community always react the same to sudden movements in the markets.

Russia launches attack on Ukraine

If I were an airplane pilot, I might as well say that I’ve been over 280,000 flight hours. That is the approximate number of hours that my eyes have been looking at stock charts since I started working with them in 1989. And of course, this type of tension has already occurred on several occasions, either due to war issues, attacks or economical crisis.

Investors as a community always react the same to sudden movements in the markets.

One of the characteristics that outlines these movements caused by the fear that the military tension will increase is that we always see an opening with very important bearish gaps.

Falls of 5%, or 10% as in 2008, are common since the amount of investors frightened by events determined to sell at whatever price at the time of opening is very high.

Subsequently, in a large number of cases, the market begins a fairly powerful bullish reaction that usually returns about half the fall.

The problem comes later with the countermovement of the market. Normally, there is a test and loss of the opening levels to generate new lows. which are usually maintained until the opening of Wall Street.

It is curious that at the moment we have not set new lows yet, although we are very close to them.

Around 2:30 pm, and today with the publication of the 4Q GDP data in the US, we will see the trend of the US market and the afternoon for the Europeans. The moment of truth arrives. If the market begins to bounce, it is time to buy selectively, but above all, with little load.

The idea is buy a small position that does not exceed 25% of the amount with which we are used to entering in the style and likeness of the one I explained in detail almost two years ago at the height of the first wave of the pandemic.

But this time I have also added that selectively. We are talking about a major military attack by one of the most powerful military powers in the world and this changes the plans.

Here it is not worth buying everything like two years ago. Here and now we should set our target for the first shot to values ​​like Repsolwhich benefits from the price of oil, Siemens Gamesain which there is the possibility of a takeover bid by its German parent company, and others such as Iberdrola either IAG.

However, we must also add a small detail that also changes the usual scenarios of this type of movement and that is that we are now in a bear market scenario since last November in the case of the Nasdaq, an index that has served as the leader in the increases in recent years and that now, with the current inflation and imminent restrictive monetary policy by the central banks, will consume the market ceiling.

Thus, for all the above we cannot consider large purchases but more small entries with the idea of ​​getting a good weighted average price and get away with a reboundthat when it arrives, it will be equally important and according to the declines that we are seeing.

Russia-Ukraine War

  • Direct from the 2022 Russian invasion of Ukraine
  • The clash between Zelensky and the head of his Territorial Defense: the keys to a strange dismissal
  • The Duma asks to treat Azovstal soldiers as “criminals”: Russia and Ukraine negotiate their fate
  • Finland and Sweden jointly submit their “historic” application to join NATO
  • This is Tulip, the largest heavy mortar in the world that Russia has used to conquer Azovstal


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