Traders take note: Russian stocks – one of our favorite gauges of risk appetite – are struggling right now.
Seasoned traders see Russia like this: It's the largest country in the world... and blessed with incredible deposits of oil, natural gas, nickel, gold, timber, and diamonds. Those are the major "pros." The major "cons," however, are literally major cons. Most anyone who does business in Russia will tell you the government is as crooked as a dog's hind leg. This introduces tremendous risk to an investment or trading position.
This "lots of valuable resources, lots of risk" situation makes Russia boom and bust like crazy. Russian stocks skyrocketed more than 500% from 2003 to 2008. Then, during the credit crisis, they turned around and lost 80% of their value. In 2009, they staged another incredible rally and tripled off their lows.
But as you can see from today's chart, this rally is now stuck in the mud. Russian stocks, as represented by the Market Vectors Russia fund (RSX), have moved sideways since October. It has failed twice to eclipse its January high. The fund is also sporting massive trading volume on declining days and flimsy volume on advancing days. The "risk players" have had their fun and are now bailing.
Seasoned traders see Russia like this: It's the largest country in the world... and blessed with incredible deposits of oil, natural gas, nickel, gold, timber, and diamonds. Those are the major "pros." The major "cons," however, are literally major cons. Most anyone who does business in Russia will tell you the government is as crooked as a dog's hind leg. This introduces tremendous risk to an investment or trading position.
This "lots of valuable resources, lots of risk" situation makes Russia boom and bust like crazy. Russian stocks skyrocketed more than 500% from 2003 to 2008. Then, during the credit crisis, they turned around and lost 80% of their value. In 2009, they staged another incredible rally and tripled off their lows.
But as you can see from today's chart, this rally is now stuck in the mud. Russian stocks, as represented by the Market Vectors Russia fund (RSX), have moved sideways since October. It has failed twice to eclipse its January high. The fund is also sporting massive trading volume on declining days and flimsy volume on advancing days. The "risk players" have had their fun and are now bailing.
