There's only a couple of ways to play markets at this point in time.
First is that you're betting on real fear in that Russia-Ukraine tensions will escalate into a war scenario. Second is that you're betting tensions will ease as the reported invasion will be not materialise or that either Russia or Ukraine back down. Third is to wait on the sidelines and go with where the headlines take you before staking some money in the game.
The third option while safe, is arguably the most logical as it isn't so much so a gamble. And there's few ways you can play that as well by either banking on fear emanating deeper across markets or by fading that fear i.e. buy value, sell hysteria. And in the flip side scenario, if tensions subside, you can ride the optimism as well.
That's at least my take on the current trading landscape with everything else taking a backseat to Russia-Ukraine headlines.
As for fear trades, the yen and oil are my two favourite picks while in a situation where tensions are defused, they would be favourites to short with stocks the clear beneficiary.
I know there might be some of those still long on oil like I am at the moment so I'll share a bit on how I might end up playing this out. If tensions do escalate, I'll stick with longs but at any clear sign that we are not headed to military confrontation, I might consider taking out the entire position as I fear the "dip" this time around is going to be a big one.
Eight consecutive weeks of gains for oil is a massive stretch and if there is selling from the whole Russia-Ukraine situation, I think the selling can hit rather hard. I'm tempted to maybe keep invested via small lots and scale out maybe the remainder 80% of the position but reflecting on it, if the dip is going to be a rather sharp one, why not just play the tea leaves and technicals and scale back in on longs again after.
We'll see I guess.
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