Analytics from Stepan Sumin, Asset Manager at CRESCO Capital
The Russian stock market is correcting up on Tuesday after a strong sell-off caused by increased geopolitical rhetoric. The Moscow Exchange index during the morning session adds about 2%, to the area of 3300 points.
Yesterday, the Russian market witnessed another “black swan” – it collapsed, unable to withstand the pressure of geopolitics. The Moscow Exchange Index fell by 5.93% to 3235.28 points, the RTSI – by 8.11% to 1288.17 points. Among the fall leaders were VK (-11.0%), Ozon (-10.6%), Aeroflot (-9.2%), Yandex (-8.7%).
The focus was on the situation around Ukraine. The triggers for such rapid sales were the news about the plans of Western countries to evacuate some of their diplomats from Ukraine in view of the expectation of a possible, in the opinion of foreign politicians, Russian invasion of the country. In addition, the media reported that the United States is considering the transfer of troops to Eastern Europe.
This morning, stock prices are rising, but as we can see, there are no bullish divergences on the main indicators on the daily stock charts. The Moscow Exchange Index is in the bearish zone, and in order for the situation to change, it is necessary to break through the 3650-3680 mark, the nearest technical resistance is at the level of 3550.
The RTSI index feels a little more cheerful in the morning, adding 3.1% at the moment, but at the same time, strong volatility throws the index in different directions, and we see a range of 129160-134320 for the March futures on the RTSI index. By 12 am, having closed the trading gap on Monday, it is trading near its open price of 131500.
On the Western grounds there is negative sentiment on the eve of the meeting of the US Federal Reserve, although yesterday’s technical rebound in US indices showed that there are cartridges. The puncture of the 200 EMA only strengthened the feeling of an early decline in the US market.
A possible scenario in terms of technical analysis: SPX will move sideways 4240-4400, but with the slightest positive news, it can make a technical rebound to the area of 4480-4529, after which there will be a rollback back to local support zones.
We expect continued strong volatility in the markets and active speculative transactions during the day. The next two days in connection with the Fed meeting may set the tone for the markets for several weeks ahead.