I recently bought the Market Vectors Russia (NYSE:RSX) etf at $24.80. I am bullish on Russian equities based on its terrible past price performance, negative sentiment, dirt cheap valuation, and attractive chart pattern.

After Russia’s debt default in 1998, the Russian stock market went on an explosive run for 10 years appreciating by 50 times. Since the global financial crisis, however, it has been among the worst performers globally declining 50% during the past six years. This is because Russia’s economy has been grappling with slowing growth, high inflation, shrinking current account surpluses, and a weak ruble. The recent tensions with Ukraine have only exacerbated investor antipathy.

As Nathan Rothschild famously said, “the time to buy is when there’s blood in the streets.” It’s hard to find an investment today where that is more applicable than Russian equities. Russia’s incursion into eastern Ukraine and its annexation of Crimea has sparked worldwide concern of potential war. Hillary Clinton, John McCain, and German finance minister Wolfgang Schäuble have gone so far as to compare Vladimir Putin’s actions to Adolf Hitler’s aggressions in the 1930s.

I am no expert on Eastern European geopolitics, however former U.S. Secretary of State Henry Kissinger doesn’t believe the Putin-Hitler comparison is valid. Speaking to CNN earlier this month he says,

“One has to ask oneself this question: He spent $60 billion on the Olympics. They had opening and closing ceremonies, trying to show Russia as a normal progressive state. So it isn’t possible that he, three days later, would voluntarily start an assault on Ukraine.”

“I think at all times he wanted Ukraine in a subordinate position. And at all times, every senior Russian that I’ve ever met, including dissidents like Solzhenitsyn and Brodsky, looked at Ukraine as part of the Russian heritage. But I don’t think he had planned to bring it to a head now. I think he had planned a more gradual situation, and this is sort of a response to what he conceived to be an emergency situation.”

A full blown war could certainly breakout and cause Russian stocks (as well as stocks around the world) to drop further. But a lot of the fear is priced into Russian stocks since they trade at the cheapest valuation relative to the world and to its own history.

The chart of the US $ denominated RTS looks like a false breakdown recently took place. If so, it should signal an explosive move higher.

What I like most about this trade is that there is a clear stop loss level at the bottom support line. I am willing to own RSX as long as the RTS does not post a weekly close below 1220. I will keep track of the performance of this trade here.