Has Russia Bottomed Out?Russia has been a hot bed of geopolitical issues through out 2014. However, the Russian stock market has bounced by over 17% year to date(as measured by the RSX etf).
Fundamentals
Since Russia entered into a cease fire with Ukraine the sails have been in stock markets wind. Even with the major positive movement the Russian ETF, RSX is still at a 5 year low. The Russian economy depends heavily on oil and gas production, which accounts for 70% of Russian exports and approx 50% of the budget. Since entering into a recession in early 2014, clearly its economy has been hit hard by lower oil prices .
As Oil companies, adjust for lower oil prices, but reducing exploration and reducing rigg counts, you can clearly make a case for higher Oil, later on in the year. Also if there are any, reduction in OPEC supply this will be good for the Russian economy as well, which will directly translate to good earning for Russian oil companies.
Russia has been very volatile lately and has experienced a downgrade, however its not likely that there will be a debt default situation since Russia's reserves can cover them for at least 2 years, the debt to GDP is lower then most other countries and its depressed currency will help to increase exports on the open market. All of these factors have the potential to give the economy a bit of boost and deliver it out of recession.
The one dark cloud, is the continued sanctions that are being imposed by The US and other European countries, which have been extended for another year.
Technicals
After reviewing the monthly chart of RSX, its appears that its may have bottomed. The RSI indicator, has moved above over sold territory. The last time the RSI indicator was in oversold territory was during the 2008 market crash and it staged a massive rally over the last 5 years.
After reviewing the Fibonacci retracement levels the stock is just below the 23.6% level. Going at its current trajectory if it breaks that level it will indicate that its being a new uptrend.
The Trade
Currently, RSX is trading at $17.38. I see this as a long term investment, but I believe there is plenty of room to trade it.
Trading Targets ( 1 - 6 months)
Short Term profit target is: $21.35(23.6% Fib Level)
Short Term Stop Loss: 16.86 (3% Stop)
Investment Targets ( 1 - 5 years)
Long Term profit target: $40.16(61.8% Fib Level)
Long Term Stop Loss: $14.06( Previous Low)
Russia
"Crude Oil" a Huge profit to be madeCrude oil is making new grounds with it soon to
come with its reverse pull back, same thing
happened in 2009 although there is a possibility
that crude can slide to support at 40$. either
way i will be easing my way into a positions
using the ETF UWTI which is priced very cheaply
at 3$ a share. also a big shout out to @Ricker for showing me UWTI
$RSX, $USO, $UAE correlation. Consolidation before volatility. The market has shift anticipation period. Now should consolidate. Volatility around $60 per barrel should drag for awhile now.
WTI Near "Support" While Sentiment Still To The DownsideWTI has played out fundamentally, and the fundamentals (along with sentiment) still remain to the downside. Traders love to pick out bottoms by catching falling knifes, and they're usually cut up in the process.
On a risk:reward basis, sure WTI may seem like it's at a nice area to buy. Yet, I think it is still to early. Crude will likely find support at the longer-dated support in the low $43's per barrel. While I would suggest opening fresh shorts without a pullback, it still may be early to gobble crude futures.
The implications are still apparent. Supplies are still gluttonous, and shale companies are hurting. WBH Energy has become the first casualty of the oil warfare. I expect more to come, particularly Cheniere (idea to come).
I have been short since $74, and I wouldn't suggest serious upside unless $53.5 is retaken.
WTI Consolidates on WeaknessIn my previous analysis "Que 2008," I likened this drop in oil similar to the one we've seen in 2008. This was based on both over leverage in the oil and equity markets, diverging fundamentals and a strengthening dollar throughout 2009 - which brought on deflation.
Prices did collapse through $60 as expected, and nobody is willing to cut production to reserve market share. The UAE Energy Minister said $40 oil is quite possible and nothing to worry about within a three-month period.
The problem is, whether it's OPEC nations or US shale producers, lower prices will cause ongoing degradation of the sector.
US energy CAPEX looks to be reduced significantly (2/3 CAPEX in S&P500), as producers are already cutting jobs, future CAPEX and turning rigs offline - as we seen in 2008.
Some have hope that these moves will help position companies for a bounce back. However, I liken that to companies cutting jobs and buying back shares to boost earnings. It doesn't work in the long run.
Without demand, oil will remain much lower than previously seen. Limited growth in the US and emerging markets and no growth in Europe is setting the stage for subdued prices.
If WTI closes below $53.50 per bbl, I expect technical "trap door" selling, and we could see mid-$40s per bbl.
Conversely, a close above $59 could send prices to $65 per bbl in order to re-balance to sharp decline. However, if fundamentals remain weak, support will remain weak.
Interesting article If debt isn't fully paid...If Russian USD debt isnt fully paid that would be the perfect catalyst to push even lower the Ruble. The Russian situation has been the most interesting currency trade last couple of months
crude oil (brend) ukoiltask to break the wave A red .Now completed six months, a year, the five-wave growth interruption wave A blue
Experiencing a Russian NeurosisSelf-inflicting wounds provide the best opportunity when markets mirror an emotional response that diverges from the economic realities of a nation awash in resources. Patience is an investors best friend and when pull backs occur, we take notice and begin positioning ourselves to benefit from a shift in social mood or rather a saturation in news that provides a base.
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GLOG NATURAL GAS INTERNATIONAL SHIPPING TO A NEWLY DEPRIVED EUBREAKING OUT ADVERSE TO MARKET AND WORLD EVENTS
This stock is above any resistance points and if continues above indicators on high side it will continually break highs on a daily basis. They are a Monaco based company that is very strong fundamentally and even spun off a LP for dividends under symbol GLOP.
This is a fundamentally and technically solid stock and as America will stand to possibly be main if not only Natural Gas producer in world, then the European tankers will cut costs of transports and supply the EU with NAT GAS even if Russia cuts Ukraine and Europe off. Combining this withe the prices paid by EU countries for LNG and the threat of oil and gas being taken DOMESTIC LNG becomes a foremost priority to ship as of almost yesterday!
ANOTHER GREAT FIND BY "JACKIE MOON"
Continue to Like Russia HereRussia is a market that I like as a standalone. I have already one phase in as I stated nearly a month ago. Here is why... "Russia is currently trading at .6 times book value. The reason for this is quite clear, if the US and Europe pose sanctions on Russia, the companies within will be harmed economically. The question for investors is by how much will sanction effect demand and therefore how much pressure will be put on earnings. Couple this with already poor economic conditions and high inflation in the region, there is no question why market participants hate this market. This is where I see opportunity. The book value of .6 is currently 26% of the 2.2 price to book value of the S&P 500. The only times this ratio was at this level was 2008 and 2001. On a price to cash flow basis, this is the lowest level since 2001. On a price to sales basis this is the lowest level since 2001. Now this may take some time to materialize, however I think the recent the market discounting future negative economic performance has provided an attractive entry point for investors in Russia. I am looking to implement this position in two phases, one sometime this week, and next level if we see 10% lower. That’s it."
Re-starting a swing long in TBT First add was 63.70 will add lower looking for rates to rise possible 67-68 1st target.
