Obama’s Fighting Words Not Behind Sell-Off

Investors aren’t ignoring Ukraine risks, say investors on StockTwits.com. The economic fallout of the West’s limited response to Russia’s annexation of Crimea is largely priced-in—even for Russia.

Year-to-date $SPY is up 1%. Russia $RSX is -20%, Emerging markets $EEM -5% YTD.

— David Shvartsman (@FinanceTrends) Mar. 26 at 12:03 PM

S&P 500, $SPY, and Dow, $DIA, edged lower by mid-afternoon Wednesday after President Obama’s fighting words for Europe. At a news conference after meeting with Western leaders, The President pressed European nations to spend more on defense in order to curb an expansionist Russia. The Nasdaq, $QQQ, lost nearly a percent amidst talk of frothy tech valuations.

$RSX, an ETF that tracks the performance of Russian stocks, gained half-a-percent mid-day. Meanwhile, $RUSS, a 3X levered ETF inversely related to the performance of Russian stocks, fell more than 2%, sparking debate and earning it a spot on the StockTwits’ trending bar, which tracks the most discussed tickers.

$RSX $RUSL expecting profit about 5x risk if prices return to low normal 2013 range, hedged on the downside.

— Market Collab (@marketcollab) Mar. 25 at 01:04 AM

The U.S. and Europe have adopted sanctions on a Russian bank and key Russian leaders. The World Bank said that Russia’s economy will grow by 1.1% in 2014, slightly less than last year’s growth, assuming that the West’s response is limited to current sanctions and does not expand to include trade sanctions. If war erupts, of course, all forecasts are off the table.

Many cashtaggers argued that trade sanctions—let alone military action—were not on the horizon. Europe is too reliant on Russian oil to risk them, they argued. Germany, Europe’s strongest economy, imports more than a third of its oil and gas from Russia.

$RSX Thirdly, west needs access to Russian mkt and will end up rationalizing. Economic self interest wins.

— rogi volvap (@pavdog) Mar. 25 at 12:55 AM

Of course, the belief that Crimea won’t tank the markets isn’t a call for the 5-year bull market to continue. Sentiment on the S&P 500 is still 51% Bearish, according to StockTwits’ analytics. But fears that the underlying U.S. economy is not strong enough to sustain stock valuations without Federal stimulus is a large part of the bear argument. Another part of it is the charts are making people nervous.

Dow Jones Industrial Average Setting Up For A Very Bearish Scenario $DJIA $SPX $DIA $SPY http://stks.co/c0N6u

— ETF Daily News (@ETFDailyNews) Mar. 26 at 12:54 PM

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