REASONS RUSSIA OUTCOME IS BEST CASE SCENARIO
• Russia is a dictatorship and doesn’t need approval
• The U.S. and Europe were clear from the beginning they would not
defend Ukraine militarily
• The cease-fire amounts to a partition of Ukraine but leaves Ukraine
with a lot of sovereign territory
• Ukraine knows it would be destroyed with no sovereignty in an actual
fight with Russia.
• Russia proved Eastern European countries cannot depend on
U.S./NATO to defend them
• Putin got his East Ukraine land bridge to Crimea
• Putin has Crimea as a warm water port allowing him to supply
weapons to anyone via sea.
SETTLEMENT MORE STABLE THAN GENERALLY
THOUGHT. AGREEMENT CAN ENDURE BECAUSE
EVERYONE GOT WHAT THEY WANT
• The Ukrainian government shows it made a HEROIC
goal line stand.
• Obama weakened the U.S. as he wanted to
• Russia got its warm water port and more territory to
control
• Ukraine got to survive as a apparently sovereign
country
Putin has achieved his main objectives.
• He gets to keep Crimea, even if Russia’s annexation is never
legally recognized (think Israel and East Jerusalem).
• He ensures that Ukraine joining NATO or the EU is out of the
question for the foreseeable future.
• He shows that former-Soviet countries that openly defy Russia
will suffer severe punishment, so deterring others such as Georgia
and
Azerbaijan from flirting with the EU and NATO.
• He reveals, yet again, that NATO and the US are what Mao Zedong
used to call ‘paper tigers’.
• And he shows that any popular uprising against his regime
in Moscow would be ruthlessly crushed. He thereby reinforces his
political invulnerability and even his popularity within Russia.
QQQ vs. IWM
• The all-issues Adv-Dec Line has been in a steady
climb, setting a new high for the bull market on Sept. 2nd.
This performance outpaces the gains in the NY Comp. Index,
which set its most recent bull market high on July 3rd.
However, the performance of the all-issues Adv-Dec Line has
been boosted by gains in the many non-operating company
issues traded on the NYSE, such as closed end bond funds
and preferred stocks, which continue to benefit from the very
low interest rate environment.
In addition, these issues tend to be illiquid and carry small
capitalizations. Thus, they have a larger influence on an AdvDec Line than on a capitalization weighted price index.
That is, a 1-penny rise puts an issue in the advance column of
the Adv-Dec Line but contributes little to price gains in the NY
Comp. Index.
1 year advance/decline line everyone sees
NYSE Advance/Decline line without bond funds and foreign stocks. This is the first failure.
Remember the S&P 500 and the QQQ are at new bull market highs as of 9/5/14
1 pm Tuesday rally day – not a break out
Qqq not a change in trend
Early August led to rally.
The 1.75
level.
Clean out
Monday. The point on the ratio is 175, when the big long-lasting rallies start. That level requires a
much bigger sell-off that the market has been able to sustain this spring and summer..
The 1.75
level.
Clean out
8/1
172.78
170.6
Back in August – this was how we called the start of the rally -- Spx 1920/ Rut 1125.40 = 1.706
Today – Wed evening 9/18/14
9/18/14
Index
SPY
RMN
Close
200.71
115.42
SPY: RMN
1.74
Inflection Point. Can’t tell where it goes next, but this will help read the XRAY!
Hope for break-down, and could cross briefly and suck technicians in. Anchoring is automatic trained seal response
Change of character? Another way of looking at it.
Monday
9.30 am Tuesday morning.
WEDNESDAY Evening. How quickly they forget!
1 pm Tuesday rally day – not a break out
Tuesday 1 pm QQQ not a change in trend
Wednesday Evening – no help yet on Russel
Wed evening- selling running out of gas just as Russel:SPY becoming oversold again. Remember why it didn’t last!
Effective Use of Leverage =
Effective Management of
Resources.
• Bonds do not stop you from owning stocks
• The question is what happens to the money when you are
less than all in.
• How often is your level of certainty high enough for 100%
of possible allocation?
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1
million readers each week. For more information on John or his FREE weekly economic letter go to:
http://www.frontlinethoughts.com/learnmore
From 2007 Through September 2014
Portfolio
100 Equities
75 / 25 Bonds
50 / 50 Bonds
30 / 70 Bonds
Max Value Drop
55%
35%
20%
10%
Time Under Water
4.5 years
3 years
2.5 years
1.5 years
Portfolio Returns
41.5% (5.4%)
40.3% (5.2%)
40.1% (5.2%)
39.0% (5.1%)