'Peace breaking out' (or at least movement towards ceasefire) was right at the heart of our suspicion of Oil being overdone on the upside and stocks very much suppressed beyond logic, hence sensitivity to any hint of talks progress.

Pixabay

Certainly Russia did 'not' help the situation by shelling a maternity hospital as a ceasefire / corridor was supposed to be open for Mariupol evacuees today, but the stock market held-up even as the aggressor again violated its pledge.

Most important is that Thursday's talks will be at the Foreign Minister level ('if they're not cancelled') and that alone suggest backchannel progress around a few key tenets of negotiation are already stipulated for consideration. I noted this in the last two days as Ukraine's President Zelensky hinted at compromise on several areas, then backtracked slightly on territorial issues today (maybe he was overly generous or realized he was revealing his end-game too soon).

Regardless this is progress and as I suggested from the get-go, wouldn't be at all surprised if this ends with acceptance of Russia's occupation of Crimea as well as some of the (Eastern) Donbas region, but not of anything west of that river that almost naturally divides the country. Odessa is just west of it and Kviv the Capitol is essentially right on it, primarily the western banks of the river.

I might even point out that my parents emigrated from Vienna, while my Dad's birthplace was in what is now Lviv (you see on the news daily), a western part of Ukraine that in those days around the 1st World War periodically as part of Poland (known as Galicia), or Austro-Hungary or Russia, and was often under siege. I point that out as there was and is no historic Russian claim to Lviv.

Many discussions are out there, about market delta (technical jargon) and of course commodity complex shifts (higher and lower), more oil production from the Middle East, and ignoring Canada's offer to step-up (saying "we're here").

Or you'll hear that this is the 'shoulder season' for Crude Oil demand, as they build petroleum stocks and there is lower demand for retail gasoline. This for the most part is nonsense to try to attribute the day's slide to anything-other of course than the prior day being a big-blow-off top for now, in most commodity contracts, not just Oil.

And you'll hear that Crypto is stronger with the Administration clarifying many priorities regarding a digital currency. That provided some 'relief', but mostly it is bullish sentiment following the S&P, which it has tracked and has surprised many who viewed it as a hedge, which it is not. The U.S. is trying to work with it though, hence today's list of guidelines suggests some direction by the Feds thought that doesn't mean the Federal Reserve. Bitcoin (BITCOMP) could become less of a sort of 'rebellious' speculation if it were regulated by the U.S. Government.

Note that Coinbase (COIN) has locked the accounts of 25,000 Russian holders. That is interesting, as 'even if' they manage to get out of Russia they might find the effort to circumvent regulations (including U.S.) wasn't so successful.

Really though this not about institutional investment in crypto or even in Oil of course, but a reflection of traders being too-heavily-poised in what already got too distorted (higher or lower, like stocks low and Oil too high), with some sort of 'reversion to a mean', which doesn't mean more challenges aren't pending.

'High anxiety' prevails with today's reversion by everything to a degree, from such recent extremes that begged for this recovery to occur in stocks, broadly for that matter, and for commodities and especially Oil, to retreat somewhat.

None of these moves are necessarily more sustainable than the preceding hit was to the market, and technically the S&P snapback did exactly what I noted it needed to, in-order to have technical relevance (on a daily-basis chart). We got a close (barely) above 4270, and for 2 days I've noted 4270-4300 as what we needed to see to suggest any real rebound (and cushion above the lows). So we're right there. My suspicion is we move above it briefly then consolidate temporarily and await outcome from Turkey where Ukraine and Russia meet.

However, let's not be lulled into any sense of complacency, and you all know why of course. Not the Fed, not even recession concern (which inflation at the very high levels could ensure more than the coming Fed campaign to break it, which really can't do much against foreign-sourced prices other than .. killing a good bit of demand...of course). It's really all about the war, and an end to it.

We haven't been in a genuine 'bull market' for over a year 'internally', with the nonsense about percentages off the S&P high quite absurd. More significant, in recent days, was the exhaustion of small-caps on the downside, which was a hint we provided of the probabilities of 'anything' suggesting rapprochement in Europe helping to allay the idea of a really long hiatus essentially globally.

The decline in Oil is absolutely the kind of post-spike shakeout one expects in an historical framework. However much of that depends on the duration of the truly global shifts in sourcing (and unnecessary homage to Iran, Saudi Arabia, UAE, or Venezuela), while North America is capable of meeting all the needs.

What is most bothersome today besides the Ukraine/Russia negotiations (that will be held in Turkey, so perhaps Erdogan wants to get limelight for progress if any). Also, the U.S. taking a stance of refusing trade with 'any' country that's trading with Russia is tricky. China is planning or trying to buy (abandoned?) Russian Oil stakes, and of course the global players want those assets back 'if' we get to a post-Putin era of more normality. But this is a game of chicken with China if we go this way, and likely not productive while fraught with peril.

In theory this seems morally the right thing to do, but if China finds itself in a secondary situation, that won't work well or at all. Optically the U.S. stance is logical, but realistically impractical. It's sound like a push that fosters global division, as I fear could have lingering economic effects down the road.

Corporate wise many companies could be in a world of hurt if that happens. If no mention of others, just Apple (AAPL) gets almost 20% of revenue from China, plus of course almost all their gear is made there. Then there's Tesla (TSLA) and others. I might add that with Oil prices likely to be firm going forward (the 80's likely are now a floor where previously they were sort of a pre-war ceiling), EV autos for sure are in many minds as their next vehicle (at least over the next 2-5 years).

Anyway that's part of why stocks like Canoo (GOEV) rallied fairly sharply and, corrections aside, it's possible that continues for awhile. Also huge news with Amazon's 20 x 1 stock split, announced after the close (AMZN). The 'buyback' part of their story was more important than the split, as far as levitating share price. If this is a hint of the future (it has been and is), then you have some effort at a renewed mega-cap buyback trend (Apple, Google, AMD).. most all do it. It's not going to define a market, but it helps cushion the extent of severe breaks.

Thursday is very dependent on palpable progress from negotiations in Turkey, as otherwise today's huge thrust will appear to be a short-squeeze within an ongoing downtrend. BUT, if there's significant progress it can be more. Many issues that are beyond imponderable, while significantly making where things go from here unsure. I think we tested the bottom-end of the S&P's range, but there are just other factors that could literally 'blow-up' the most interesting of market patterns, including this one. Optimally we had a washout, a secondary test, and up we go, followed by consolidation and then higher. But that's too conventional perhaps for this situation. We would welcome that, and peace.

It's hard to imagine Putin agreeing to any compromise, even as Ukraine has a tendency to negotiate given the extent of suffering and lack of NATO helping a lot more visibly. Right now I'm crossing fingers that the Ukrainian delegation at least 'gets' to Turkey without the Russian Air Force laying a trap. And recall in Syria or Georgia, the Russians have a penchant for attacking and devastating defenders under sort of a cover provided by high-level negotiations. We'll see.