All the major averages finished the week down 1.75% or more and gold was the big winner, ending the week up 3.11%. Here's a daily chart of the S&P:
We were told the reasons for the sell off on Thursday was events brewing in Russia as well as terrible economic news out of China which I documented in last week's commentary. And while that these two issues were the catalysts that sparked the weakness this week it's never as simple than that. So far as the crisis in the Ukraine goes, events are still very predictable mainly because, short of military intervention, there is nothing the West can do to stop Putin if he chooses to break up the Ukrainian republic. Certainly, at this point, Putin has to be considering the enormous depreciation of the Russian ruble as money exits the country at a rapid clip and this situation, more than any other, may put the brakes on his imperialistic ambitions. But when this is all said and done it will go down in the financial history books a a "splash in the pan". The global economy has much bigger fish to worry about and it is China!
In the meantime, I'm looking for a bounce next week in stocks predicated on what I see as waning downside momentum in the indexes and Treasuries bumping into some resistance that could only be breached by another major negative news event. In other words, both Russia and China have been priced into stocks at this point. A proof of my thesis can be seen in small caps which also took a drubbing this week but had a surprisingly strong day on Friday before the weekend. Here's a daily chart of the Russell 2000: