The broader markets continue their sell-offs amid worsening of Ukraine-Russia tension, resulting inflationary effects from the conflict, how the monetary policy would have to change and how that would negatively affect the US Economy. Here's what the narrative on Wall Street is like: sanctions against Russia will lead to higher oil and energy prices, which leads to hotter inflation numbers, which will force the Federal Reserve to raise interest rates aggressively and start quantitative tightening in the process, which in turn will damage the economy and bring us right into a recession. 

But we don't agree with this narative: we believe there are many parts in this link that could go positive, and at this low price level in the market, the rewards are greater than the risks. We would have held a different view if the market was at all-time high, then the risks are greater than the rewards. But again, with the market already knowing and talking about all these risks, we believe the rewards here are much better. Let's say Russia stops their aggression and everything comes back to normal again (we are not saying we predict that), that will certainly send the market up. Let's say the US reaches a nuclear deal with Iran, which allows Iran to supply the world with their energy, brings down energy prices, that will send the market up. Even if Russia does go on a full-on war with Ukraine and all of what the market fears happens, we just don't think there's much more downside than a total 20% from peak-to-trough correction (we're already at 10% for the S&P 500).

What we said above is our analysis of the market sentiment based on price actions and market psychology. Let's now bring in our technical expertise and evaluate purely from a technical stand-point, what could be happening in the coming days:

We offered you our fundamental and technical analysis of the market. To summarize, we think the fundamental looks good, but the technical potentially can be bad. So what are we doing? We are buying positions that have come down significantly and at price levels we are comfortable with (see what we sent out this morning about position-building). Meanwhile, we are hedging the portfolio with short-term put options on the indices (a put option makes money when the underlying security goes down). We would advise to purchase put options that are no more than 1% worth of your portfolio. In these uncertain times, protection with cash and put options are helpful.