BLACK SWAN EVENT

We call Black Swan Event in the market, when happens something unpredictable and abrupt. The totally non rational event which was not calculated at all by no one. It is impossible to predict this event. It creates very strong and volatile move on the markets. This is the magic of randomness of the market. This called a Black Swan problem and you should read the best seller book about this theory by Nicholas Taleb.

He identifies Black Swan events like this: 

• The event is a surprise for everybody 
• The event has a major effect on the markets.

Guess what Black Swan Event was this weekend? Right. The Russian military invasion of Ukraine. Nobody expected this last week. All markets closed Friday the week with really nice gain and there was optimism and on the weekend after the Ukrainian news all markets dropped brutally and the pessimism now the sentiment. That was a free falling Monday. The market opened with gap and the whole day was diving further without almost any correction.

• Dow 16,168, -154, -0.94% 
• Nasdaq 4,277, -31, -0.72% 
• S&P 500 1,846, -13, -0.72% 

The US indices are quite okay, but Nikkei and the European indices were in free fall mood. What is gonna happen now? In our view the market was bullish last week, and still bullish today and will be tomorrow. On the weekend only the sentiment changed to due to fear of war in Ukraine, but the trend is still long so this choppy Monday was a good dip buy opportunity for us.

On the contrary all commodities made great rally on oil, gold, wheat, soybean, corn ... etc. WTI oil jumped from 102 to 105 within a day.

The BFM Assets Team.