Markets this week

As of Sunday evening 7th February, some broad macroeconomic factors are lunging around potentially impacting how smoothly trade flows this week. Couple of those that we are keeping an eye on:

Markets will remain choppy this week with a chance of being volatile and a probability of whiplashes all over your trades.

  1. Russia / Ukraine crisis: Seems like its a non starter that both sides are using to negotiate something (who knows what) out of the other. Overall, markets seems to be ignoring the rhetoric from both sides, thus far. Iran nuclear deal doesn’t seem to be adding much to the narrative but keeping a close watch. So far negotiations and discussions seems to be working well.
  2. Supply Chain constraints will continue to affect the companies of all shape and sizes. However, as was clear in last week’s earnings, some are able to handle the constraint better than others. $aapl, while acknowledging the challenge of supply chain, expressed and demonstrated far more capability in handling the supply chain crisis than did $tsla. The markets reaction to the stocks was a function of their ability to handle the future as opposed to their accomplishment in the past which was already priced into the model.
  3. Inflation and fed remains a complex topic and until the Fed actually goes and implements a rate increase, markets will continue to speculate the impact which in turn will continue to add volatility. Expect prices to move up and down the EMAs and VWAPs until the ship sails off the rough waters of the Fed.
  4. Overall, market pullback so far in 2022 is not the greatest in the last decade as shown by the study from blackrock (courtesy: At about 10% this would be considered a retracement, not even a pullback.

This chart shows that the recent equity pull-back is modest compared with some of the drops seen over the past decade.
MSCI Global Market Index Pullback (Top to bottom)

In summary, we expect markets to continue to be choppy, volatile and produce whiplashes. Earnings this week would be interesting to follow.

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