Dow Jones Futures Plunge As Russia Invades Ukraine; Crude Oil Prices Soar
Dow Jones futures fell early Thursday, along with S&P 500 futures and Nasdaq futures, as Russian President Vladimir Putin launched a multi-front military offensive in Ukraine. President Joe Biden said there would be "further consequences" versus Russia. Bond yields declined, while crude rose and gold futures rose.
The ailing stock market tried to bounce back on Wednesday but then sold hard, with the Dow Jones, S&P 500 and Nasdaq lowering their January 24 lows. Futures indicate that the Nasdaq will enter a bear market on Thursday.
Russia invades Ukraine
Putin announced a "special military operation" early Thursday local time, which he called "aimed at the demilitarization and demilitarization of Ukraine". Russia said it was using "high-precision" weapons to strike Ukraine's jets, air defenses and key infrastructure.
Russian troops cross the border from three sides, and appear to be closing in on the capital, Kiev.
There have already been several dozen casualties, if not hundreds.
President Biden said Putin had chosen a "pre-planned war" and vowed there would be "further consequences". Biden said he would speak to the Americans on Thursday afternoon.
US could impose far-reaching economic sanctions compared to Russia's banks and the energy sector. The Biden administration has indicated it is gearing up to impose technology export restrictions on Russia, among other penalties, if there is a "further invasion" of Ukraine. European and other major allies could also significantly increase sanctions.
Tesla (TSLA) was the worst performer of the S&P 500 on Wednesday, falling below its 2022 lows after failing to find key support. Recent investors should already be out, but long-term TSLA stock holders should also consider scalping.
Following the closing, Booking Holdings (BKNG), Live Nation (LYV), NetApp (NTAP), Ultra Clean Holdings (UCTT) and eBay (EBAY) reported earnings.
Alibaba (BABA) and LNG Play Chainier Energy (LNG) released the results early Thursday.
Tesla stock is on the IBD leaderboard.
Dow jones futures today
Dow Jones futures dropped 2.6% versus fair value. S&P 500 futures fell 2.8% and Nasdaq 100 futures fell 3.5%.
The 10-year Treasury yield declined by 10 basis points to 1.88%.
US crude oil prices jumped 8% to top $99 a barrel, after being above $100 at one point. Brent crude was trading near $105.
Gold futures rose 3%, while the US dollar rose.
Maize, wheat and other agricultural commodities rose.
Russia is a major exporter of crude oil, natural gas and several major metals, while Ukraine is a major grain exporter.
European exchanges sold strongly on Thursday Russia's benchmark Moex index crashed more than 30%. Ruble Lows vs. Major Currencies/Currencies
Remember that overnight action in Dow futures and elsewhere does not necessarily entail actual trading in the next regular stock market session.
Stock market wednesday
The stock market opened higher, sold out and bounced back to break-even before closing again at session lows. The Dow Jones Industrial Average fell 1.4% in Wednesday's stock market trading. The S&P 500 index retreated 1.8%. The Nasdaq Composite lost 2.6%. The small-cap Russell 2000 declined 1.9%.
The 10-year Treasury yield rose 3 basis points to 1.98%. Crude oil futures rose 0.2% to $92.10 a barrel in an up and down session.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.5%, while the Innovator IBD Breakout Opportunities (BOUT) fell 0.4%. The iShares Extended Tech-Software Sector ETF (IGV) retreated 2.5%. VanEck Vector Semiconductor (SMH) slipped 2.1%.
The SPDR S&P Metals & Mining (XME) rose 1.3%, and the Global X US Infrastructure Development ETF (PAVE) lost 2.3%. US Global Jets (JETS) was down 3.2%. The SPDR S&P Homebuilders (XHB) was up 2.7%. The Energy Select SPDR ETF (XLE) climbed 1%, and the Financial Select SPDR ETF (XLF) pulled back 1.7%. Health Care Select Sector SPDR Fund (XLV) is down 0.5%.
Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) fell nearly 4% and the ARK Genomics (ARKG) 3.5%, both at new 20-month lows. Tesla stock remains the No. 1 holding in the Arc Invest ETF.
Key Earnings
BKNG's stock fell sharply in premarket trading, after initially rising as booking earnings declined in views and revenue topped the chart. The stock fell 1.9% to 2,469.83 on Wednesday. BKNG stock cleared a 2,687.39 buy point on February 16, but has since bounced back sharply along with other travel plays and the broader market. Travel stocks, along with most of the market, were down on Thursday.
LYV stock, playing another reopening, fell slightly early Thursday after Live Nation jumped on strong earnings late Wednesday. Live Nation stock fell 3.1% to 113.44 on Wednesday. The official buying point is 127.85. Investors can use 121.43, which will soon be a handle, as an opening entry.
NTAP stock sold out overnight as data-storage giant NetApp topped the earnings view while revenue lined up. NetApp stock is on a flat basis but is trading below its 50-day and 200-day lines.
UCTT stock fell heavily on Thursday morning, although it may reflect a sell-off in the market. Shares rose late Wednesday as the chip equipment maker lowered quarterly views. Ultra Clean stock is far from high, below its 50-day and 200-day lines.
Despite better-than-expected earnings, eBay stock fell overnight on weak guidance and in-line revenue.
Alibaba's earnings topped but revenue missed out. BABA stock fell to a new multi-year low.
LNG stock rose solidly, but off the morning's high, as Cheniere Energy eased well in earnings and revenue. The stock rose 2.8% to 119 on Wednesday, which was on the edge of the buying range. Sky-high European energy prices and Russia-Ukraine crisis Liquefied natural gas shipments are driving demand.
Tesla Stock
After closing below its 200-day line on Tuesday, Tesla stock briefly reclaimed that key level before reversing lower. TSLA stock fell 7% to 764.04 on Wednesday, hitting a five-month low from its January 28 low of 792.01
The relative strength line for Tesla stock has fallen to its lowest level since October. The RS line, the blue line in the chart provided, tracks the performance of the stock versus the S&P 500 Index.
Tesla delivered great Q4 numbers and should be strong in 2022 as production continues to ramp up, even as chip problems still limit overall auto industry production. After CEO Elon Musk promised a "product roadmap" in 2022, the lack of new Tesla models has left investors disappointed.
But the bigger issue is the weak market environment. This is especially true of growth stocks, with highly valued names like Tesla stock being particularly hard hit.
Anyone who bought Tesla with a 900.50 buy point breaking through the big cup base should have sold long ago. If you bought the 700s at various buy points, it's time to run out and lock in the remaining profits. Don't let huge gains go around and turn them into losses.
But what about investors who bought Tesla stock long ago and are sitting on big wins? Your patience and conviction has paid a great price in the last two years. It is certainly possible that TSLA stock will rebound soon and take another leg higher.
But at some point, giant winners like Tesla stock end their run and go broke. So investors need to have an exit strategy. Your exit points will vary based on your position size and percentage return, your general risk tolerance and your belief in the stock.
TSLA stock is now down 8% from its 200-day line. A decisive break here will leave no clear support levels until the 2021 lows around 540-550. If shares can't rebound by the end of the week, long-term investors may consider reducing their TSLA stock holdings. Risk increases only when the broader market starts reaching new lows.
Early Thursday, Reuters reported, citing sources, that Tesla would begin construction of a second Shanghai-area factory, even as it continues to expand its initial Shanghai plant.
Tesla's stock fell early Thursday as global markets sold off due to Russia's invasion of Ukraine.
Market analysis
The stock market tried to bounce on Wednesday morning, but quickly faded as fears of a Russian attack resurfaced. The Nasdaq Composite, up more than 1% shortly after opening, reversed sharply, eventually moving below its January 24 lows. The S&P 500 and the Dow Jones also lowered their January 24 lows.
Ever since the S&P 500 and Nasdaq closed below their January 31 follow-through days' lows, the outlook for a market rally was bleak. Since then, the major indices have continued to rack up more delivery days of high volume sales.
The S&P 500 is down more than 10% from its highs, marking an intermediate correction by traditional standards.
The Nasdaq is at the peak of a bear market, down 19.6% from its November 22 high. A slight drop on Thursday would also trigger a 20% bear range, with Nasdaq futures signaling even higher.
It wouldn't be surprising to see the market reverse in the near future after so many down sessions. But even a few good days will not indicate a clear revival.
For now, the major indices are set to start another leg down as the Russian invasion of Ukraine has triggered a new wave of selling.
Some stocks are rising right now. This is especially true in development.
The travel sector, despite some positive tailwinds, has been muted over the past few sessions, including BKNG stock. Even the energy and commodity groups that are holding are volatile and not tempting to buy new ones.
What should we do now
What more needs to be said? The stock market is looking dire, with the major indices breaking below their end-January lows after several warning signs. Every day, the reasons for staying invested dwindle. The only exceptions are pockets of market force or long-term winners. But even with long-term winners like Tesla stock, investors have to scale up or cash in at some point.
Russia's invasion of Ukraine, and the West's response, will stir markets in the coming days, with potentially far-reaching economic consequences.
Don't get caught up in the morning rush, like Wednesday, or even some good days. Wait for concrete signs of market strength. This involves setting up major stocks and flashing buy signals.
For now, keep your exposure to a minimum or stay entirely in cash. Stay engaged and prepared by watching market movements and reworking your watch lists.
