Russia: The First Bear of 2009

FN: The first "Bear Markets" for 2009... oh what fun this will be as one after another the squeeze runs out of steam and the gravity of reality re-asserts itself.

Russia Stocks Fall 20% in World’s First Bear Market Since March: "Russia’s Micex Index tumbled more than 20 percent from its 2009 peak, becoming the world’s first benchmark equity index to enter a bear market since global stocks began rallying in March.

The index of ruble-denominated shares slid 7.8 percent to 937.98 as of 6:46 p.m. in Moscow, bringing its decline since June 1 to 22 percent. The 30-company gauge led a worldwide retreat in stocks this month on concern the global recession will persist for longer than investors anticipated."

FN: Just how ridiculous was the rally? Well, ridiculous enough to rally back to January 2007 VALUATION levels. Talk about discounting a "V" shaped recovery! How does taking Russian equities to pre-crisis, credit bubble valuation levels during these uncertain, volatile times make any sense at all?

"The Micex, which rallied as much as 135 percent since October, is tumbling this month after reaching the most expensive level relative to profit estimates since January 2007, according to data compiled by Bloomberg. Russia’s economy may shrink 7.5 percent this year as industrial production collapses, unemployment rises and investors pull capital from the world’s largest energy exporter, the World Bank said today. That compares with the Washington-based lender’s forecast for a 2.9 percent contraction in the global economy."

FN: The RTSI dropped below all moving averages, 20, 50 and 200 day and there is no real support until about 800.