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September 4, 2014

Russian Equity Trifecta

My previous, two posts discussed how Russian stocks were setting up both technically and fundamentally for a strong rally. On the fundamental side, Russian equities are trading with single-digit PEs. Technically, the Russian market is due for a cycle low and is forming a positive divergence with news. A basic idea behind this potential trade is that the Russian market would explode higher once the crisis in Ukraine cools. So did anyone else notice that the Russian stock market surged higher by about 6% yesterday after Vladimir Putin announced a forthcoming peace deal?

A confirmed weekly cycle low would also confirm a higher low, as well as the positive divergence with news. If Putin delivers on his promised peace deal, I suspect the Russian stock market will see impressive gains as a 3-year bear market low is left behind.


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