Contrasting this stock market to 'tidal charts' is dominating meaningless discussion in my view; as some 'pretend' this year the 7th Anniversary of an old Bull Market. This market is not only highly-correlated with Oil (which can lift the stock market in some sectors, temporarily); but has been in the midst of cyclical distribution for just about a year (actually a bit longer); with even a recession or something bordering on it, likely tracking from approximately last July. 

Not only that, but the basic upside masking that distribution was concentration in the FANG stocks, a handful of most-shorted S&P components, while broader market indexes generally lagged, except for the then-favorable impact of oil or other energy-related stocks, until Oil topped and later cracked, after achieving our upside goal of 100 / bbl; a time we forewarned that 'only' geopolitical risk at the time was holding oil up; as supply/demand imbalances weren't favorable. 

None of this has changed; although gasoline consumption is picking up, though is not the key to the current energy, nor the current currency market prospects. A lot of that depends on Russia, which is in the catbird seat with it's leadership role (usurped from a US lack of clear direction even while providing some fight against terrorists) in the Middle East, as pressure on oil producers to get in-line with a production freeze or possibly even a cut, mounts. The resistance Kuwait (and before that Iran) showed is indicative of how complex this is becoming. It's not to say there's no OPEC, and more than one can say problems in Europe for that matter means there's no EU; but it is to say there's huge pressures to join a program; just as there's pressure in Europe to accept policies that work for a few members, but not for others. 

Why mention both topics? Because these are keys to the very short-term. Right now we begin an ECB meeting and statement that most market players 'hope' is going to be supportive to Quantitative Easing (more counterproductive for all periphery members; while not harmful (or less so) to core members Germany and France. The indebtedness that's created can't be sustained by the smaller exporters (Spain comes to mind too); and NIRP (Negative Interest Rate Policy) is just creating a financial minefield for European banks, while governments do pretend it's sustainable, which it's not (central banks love the idea of somehow compelling bond purchasers while they avoid paying much interest on debt). It's not a proven approach; it's not only risky, but experimental. And likely creates a lot more problems than it temporarily solves; not to mention higher overall debt.

As to Russia; as much as we're critical of their domestic intolerance and foreign policy moves (especially pressure on Ukraine and the Baltic States), it's hard to fault Putin's chutzpah (I'm sure he wouldn't like that term haha) and bravado as well; because Russia has such a high Islamic population percentage within its borders, or immediately adjacent thereto. And many aren't happy with Moscow.

Russia (perhaps more so than the mostly-focused upon China) has a seriously delicate dependency on energy revenue, especially since Putin's policies and (even before the Middle East or Ukraine issues) his internal oppression began the movement 'out' of Russian business investment, and triggered the currency flight that has not been recovered from. That also creamed Russian money that moved into New York or Miami overpriced luxury housing, as forewarned while the Dollar bottomed and Ruble topped; even before the Euro began eroding. 

It all matters; and Russia truly needs Oil to move up to at least 50 / bbl, which is not impossible if they put adequate pressure on Iran (which they can due to the help provided against Assad) or on Kuwait (which is trickier as they now host a big new USAF regional control center, and don't need the Russians basically). At the same time (if things were not so dire in the region it might make one just smirk a bit) the Saudis and the Egyptians are finally categorizing Hezbollah as the terrorists they are (they argued with the U.S. and Israel about this for many years); but are doing so I suspect mostly because they fear Russian-supported carving-out of a 'Shia Crescent' across the region from the Persian Gulf to the Mediterranean (to wit the terrorist domination of Lebanon). 

Details (even these modest ones) are rarely heard in the dumbed-down debate forums; though they matter a lot to understand the odd prospect we suspect at this point: a Russian success brings up Oil, and temporarily the stocks market; but in the longer run creates a greater (albeit different) geopolitical challenge. A Russian failure contributes to Oil's rally running out of gas (so to speak), while the morass and conflict would continue uninterrupted. I still believe the slightly fragile but still-holding Syrian Truce (notice how that vanishes from the Press in a flash, without an explanation of village-to-village commitments being signed by the Russians on behalf of Syria with the former rebel leaders) reflects really Moscow's boot on the ground (most reports deemphasize the number of troops present, including Spetsnaz) 'as if' this was an air war almost exclusively. 

It's about to be; and the USAF is in a catch-up mode right now. US B-52's (yup the old strategic bombers) are being deployed right now to regional bases (that would be Incirlik AF base Turkey; and perhaps the new Kuwait Air Base; with a larger air-superiority fighter support (against anyone but the Russians we hope) deployed in the region; including the carved-out updated recaptured Iraq base. Keep in mind that B-52's, which in the case of the Middle East, replace B1B's as rotating home (and can't carry the bomb load for serious saturation attacks), are being sent to the Pacific Theater. And yes, besides China moving jet fighter squadrons to fake islands in international (or disputed) waters, you have North Korea ramping-up tensions, as you know. 

Speaking of Russian leadership: I'm sure Washington took note today (didn't at this point see, but hopefully the major media led with this story) of Russia being less diplomatic than China, by issuing a statement 'warning North Korea' that it is violating the UN Charter by threatening preemptive nuclear strikes on anyone and that Moscow considers it may be appropriate 'to invade' North Korea, as a response to Pyongyang's provocations. To be sure, they mentioned exercises, now ongoing, by the South and the U.S. as not helpful; but of course the North insanity is exactly 'why' the exercises were expanded. (Just in case is likely the reason the 2nd U.S. Navy Carrier Battle Group was deployed to the region.) 

In-sum: on the immediate term, it's the ECB we have to monitor, as you could of course get yet-another 'buy the rumor / sell the news' response to their move (or lack). If they move; the Euro will drop; the Dollar will rebound; and the stock market here will try to rise, but falter and likely reverse lower yet again. 

As to Russia; there's some time until the purported oil meeting in Moscow of 20 March; so we'll see. It might even be cancelled if too much recalcitrance stays prevalent. On it's own Oil should be lacking many shorts now; so can advance 'if' events and conditions allow. We want it to advance, but realize the pressure from short-covering should be about done. A move to 45-50 would rally stocks for now; and would not reflect the economic revival some analysts proclaim. 

Bottom-line: many more chatting about analysts warning of little potential and lots of risk. You can't really put percentages on it; as I've said: for Goldman to come out and call for an annual high 5% above here is ludicrous to invest for; unless they mean 'at year-end', perhaps after another 20% of more decline (of course that's not how they present it incidentally). And my view is that the risk (after this rebound) is greater than 20% if and as we break prior lows.

But it's a process; which is why the 'tide' of this market is like the real tide; goes in and out without resolution. That's actually how we suspected it would be (not pleasing to the impatient investor or trader who wants gratification of any view; but it is reality) for awhile. My overlay of the 2008 pattern so far made the point the market's making; you may know there's risk out there; but it doesn't have to hit immediately; and one can't underestimate the ability of the Street to move a lot of sectors around temporarily, so that it sort of buys time. 

There are no changes in our overall view during this market chop. We do view a period of rising risk; as after the first retreat they can't really put much other than oil-based moves together; and it has zero to do with any 'anniversary' of a cyclical bull that ended about a year ago (or was well into the process). 

Process remains the key word; as this one is a struggle to hold this together until it reluctantly gives-way as we've outlined in video views of the charts.  

Thursday (final) MarketCast

Last hour (intraday) MarketCast