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Saturday, December 17, 2016

Don’t fall in love with Russia


By now I guess everyone knows the drama about Trump’s campaign with his view about Russia and Putin. In a drastic contrast to the attitude of Obama and H Clinton who treat Russia as a pure enemy, Trump has a more friendly attitude towards Putin. Needless to say, since Trump’s win, people have suddenly started to chase Russian stocks. The ETF for Russian stocks, RSX, has jumped about 20% since early Nov.

Actually long before the election, technically and fundamentally RSX has already poised to go up as I have suggested. Even though the Russia’s market is by no means safe, it was simply too cheap to ignore and its technical pattern has already suggested a good up run for many months. Congrats if you listened to me and bought RSX. But I have to caution you that don’t be too complacent. After all, Russia is still a risky market. Right now it is experiencing a honeymoon with Trump but it won’t be a smooth line up. While it is still fundamentally cheap, technically it is quite overbought and is due for a quick correction any time now. When that happens, it could be fast and drastic as well.
Taking some chips off the table to lock in some profits is a wise action I can advise. Treat it as an early Christmas gift from Trump and Putin’s political honeymoon!!

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