Crimea - How Big a Negative for Stocks?

George Brooks  |


   Monday offered hope for the bulls as they were able to fight off a charge by the bears and close  all four market averages near  the highs for the day. 

   But the bulls needed to follow through Tuesday and demonstrate they had the momentum necessary to take  the market higher. There was no room for a rally failure.

   However, a strong open was followed by just that, a rally failure, most likely due to a deterioration in the Russian/Crimean situation and uncertainty about future moves by Russia on adjoining countries.  

   This is one of those situations that just doesn’t go away soon.  If not a jarring negative, it remains an uncertainty.


   Pre-open stock-index futures indicate a soft open today and an increasing likelihood of lower prices as the market probes for a level that discounts new  international uncertainties.

   Spring is almost here, unmasking the  reality of  just how much of the economy’s softness is due to severe winter weather.

   An added uncertainty is surfacing from China which also has some questions about economic growth.

   All this on top of a one-month, 8.3% move up by the broad-based S&P 500 Index.

   That surge was undoubtedly in anticipation of an economic recovery from a severe winter ravaged economy.  But the Russian/Crimean crisis intervened and must now be factored in.

    Resistance starting  at DJIA 16,382 (S&P 500: 1,871) must be topped to stabilize the market averages.

   Minor support is DJIA: 16,290 (S&P 500: 1,861)

Investor’s first reada daily edge before the open

DJIA:  16,351

S&P 500:  1,867

Nasdaq  Comp.: 4,307

Russell 2000: 1,187

Wednesday, March 12, 2014, 2014   9:15 a.m.



  Last week New York Fed president Bill Dudley said he believes severe winter weather  has shaved a full percentage point off the nation’s GDP in Q1, Beyond that, Dudley is optimistic since there will be less drag from federal spending cuts, improved household finances, and corporations that are awash in cash.

   Undoubtedly, a break in the winter weather will boost consumer optimism resulting in a surge of retail spending and firm stock prices.

   This transition is critical.  If  severe winter weather  scrunched economic activity, we should see a sharp rebound once warmer weather sets in.  If not, we have a problem.


   Manufacturing output , new orders and exports are  up for the eighth consecutive month, suggesting its recovery is real, though not yet robust. Our economy has scratched and clawed its way out of  a horrendous recession without help from Europe.  Obviously, a recovery there stands to  accelerate our recovery here.


   There is little the “West” can do to prevent Russia from getting its way in Crimea, unless forces within Russia reacting to a flight of capital, plunge in Russian stocks and the Ruble, rising interest rates put a leash on Mr. Putin’s power grab.  

   Don’t take this one too lightly, its potential for disruption in our markets may escalate. What is happening in Crimea has been orchestrated with far too much efficiency to be “locals” exercising their desire to return to their roots – Russia.

    With Crimea, it’s checkmate and looks like one of a number of strategic Russian moves in a regional chess game.  If internal unrest escalates in the Baltic states where one-quarter of Latvia and Estonia see themselves as Russian,  the global picture worsens.


   InvesTech Research’s March 7 edition called attention to the fact gold prices and gold miners’ stocks are down significantly since October 2011 when it warned readers  gold prices were “bubblish”and the bullion and stocks should be avoided. InvesTech incurred the wrath of gold bug subscribers, but was proven prescient when  gold nosedived.

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    After a devastating 36% plunge, InvesTech thinks the group deserves a close look, adding  Market Vectors Gold Miners ETF (GDX) to its Model Fund Portfolio and commenting favorably on Barrick Gold Corp. (ABX). GDX closed Tuesday at $26.13 (52-week range of $35.58 - $20.24) and ABX at $19.75 (52-week range of $29.83 - $13.43).

   If  a civil war breaks out in Ukraine and unrest in the Baltics  surfaces, gold could get a play from depressed levels.



The economic calendar  is light this week.

For detailed analysis of both the U.S. and Foreign economies along with charts, go Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”


No major economic reports


NFIB Small Business Optimum Ix (7:30 a.m.):Weak sales expectations pulled the index down 2.7 points in February to 91.4.

ICSC Goldman Store Sales (7:45 a.m.): Rebounded in the Mar. 8 week by 1.3% vs. the prior week. Year/year is  at a plus 2.1% rate.

JOLTS (Job Openings/Labor Turnover 10:00):There were 4.0 million job openings in Jan. unchanged from Dec. with a hires rate of 3.3 pct. and separations rate of 3.2 pct.

Wholesale Trade (10:00):

WEDNESDAY:\MBA Purchase Apps (7:00 a.m.):

Treasury Budget (2:00 p.m.)


Jobless Claims (8:30):

Retail Sales (8:30):

Import/Export Prices (8:30):

Bloomberg Consumer Comfort Ix. (9:45)

Business Inventories (10:00):


PPI-FD (8:30):

Consumer Sentiment (9:55):




Feb 20  DJIA 16,040 Winter Slump – Spring Rebound ?

Feb 21  DJIA 16,133 Housing Hanging Tough – a Harbinger ?

Feb 24  DJIA 16,103 Bull Market – the Pressure to Act

Feb 25  DJIA 16,207 Rally Failure – or Start of Another Up Leg ?

Feb 26  DJIA 16,179 Monday’s Market Action – a Signal ?

Feb 27  DJIA 16,198 Market Setting Stage for an Early Spring Rally

Feb 28  DJIA 16,272 March Setting Stage for Spring Rally.

Mar 3   DJIA  16,321 Russian Bear Providing American Bull an Opportunity

Mar 4   DJIA 16,168  Crisis Almost Over – Easy Does it on Opening Prices

Mar 5   DJIA 16, 395 Street Reaching for Risk – Sneaky Strong

Mar 6   DJIA 16, 360 Selective – Stock Pickers’ Market

Mar 7   DJIA 16,421  Pivotal Day in the Market

Mar 10 DJIA 16,452  Important Test for the Bulls Today

Mar 11  DJIA 16,418 Gold Due For a Play ?

  George  Brooks

“Investor’s first read – an edge before the open”

*InvesTech Research  - 406-862-7777 ( Truly one of the finest monthly market letters with a host of accurate economic and stock market indicators.

The writer of  Investor’s first read, George Brooks,  is not registered as an investment advisor.  Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. References to specific securities should not be construed as particularized investment advice or as recommendations that you or any investors purchase or sell these securities on their own account. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk. Brooks may buy or sell stocks referred to herein.




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