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The market seems to have come to terms with the idea of the Crimea being annexed by Russia. Now the only question is whether Putin will stop there are keep going. If he stops then markets will probably shrug it off, if he decides to invade Ukraine that could present a problem.
Today’s Fed announcement could be interesting as there could be some changes to their forward guidance and/or unemployment thresholds.
After bouncing off support around 1840 the S&P 500 is approaching resistance around 1880 (currently 1872). We would expect a test of 1880, and if it fails we wouldn’t be surprised to see a retest of 1840. International markets, especially emerging markets, continue to look weak compared to the S&P 500.
Treasury yields look directionless right now as there is a tug of war between the traders who expect higher interest rates as the Fed exits the market and the flight to safety caused by the Ukraine crisis.
In other fixed income markets the Barclays Aggregate Bond Index looks locked into a trading range but we are seeing relative strength in the higher yielding bond sectors like high yield corporate, preferred shares, and emerging market bonds.
Gold and oil are both starting to show signs of weakness, perhaps in a sign that traders believe that Putin is done taking over countries.
Positioning and Recent Moves
We have been using recent market strength to sell our counter trend positions as the market is looking slightly overbought. Over the past couple of days we have lightened up on dividend stocks, S&P 500, and NASDAQ.
Income Strategies: We are currently positioned for stronger economic growth.