Quick Charting the Ukraine News Reaction Money Flow

The Ukraine crisis continues to capture headlines and influence global money flow in today’s session.

Let’s take a moment to step above the lower frame charts and get a quick sense of the bigger picture of money flow (“Risk-Off” Play) and see how the intermarket landscape is adapting today to the news.

We’ll start with a simple price grid:

As the charts will show us soon, money has taken a sudden “Risk-Off” posture as the Geo-political tensions escalate.

Specifically, money is flowing out of stocks and into the relative safety of Commodities which is an expected or even obvious play, but we’re seeing another example of risk premium seeking hard assets as is often the case with political tension or crises in the Middle East.

While stocks and commodities tend to trade (rise and fall) together to reflect economic conditions, tension strains the relationship such that money leaves stocks and enters oil and gold particularly.

With that, stocks are down roughly 1% to 1.3% while Gold rallied 2.4% and Crude Oil initially traded up 2.0% also.

Emerging Markets (ETF proxy EEM) and Europe/Australia/Far East (EFA or the “EAFA”) is down 2.1% today.

Here’s a quick chart grid of the sudden shift as a reaction to the Ukraine events unfolding:

As seen above, stocks fell on the news while Gold and Crude Oil broke out of overhead resistance.

The US Dollar Index – sharply down on Friday – rallied slightly on the news.

By the way, keep in mind that the short-term trend of stocks, gold, and oil are all aligned strongly to the upside (though today’s action is resulting initially in a retracement down in stocks; gold and oil simply continued the uptrend already in place).

A few other selected markets reveals the strength or money flow (breakout) in 10-Year US Treasury Notes (@TY futures contract), strength also in Silver (@SI) but not to the extent of a breakout to new swing highs we’re seeing in gold, weakness in Copper (@HG), and slight weakness in the Euro (@EC) after a breakout event Friday (the opposite of the US Dollar Index’s breakdown and recovery this morning).

Continue monitoring these markets for additional reaction and shifts in money flow as the crisis escalates this week or else finds resolution/reduction in tension.

If you only trade one of these markets, that’s fine but take a moment to step out to the broader picture for a wider perspective.

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning parameters as we watch a “hold and bounce” or “break and retrace” scenario play out in the near future.

Corey Rosenbloom, CMT
Afraid to Trade.com

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Corey’s new book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).