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Morning Commentary From Art Cashin
Via UBS Financial Markets
Another Sleepwalk Below Key Resistance – The stock market again saw morning weakness reverse into mid-day sideways choppiness.
It also repeated the late day levitation that has been a hallmark of this two week rally. This time they closed near the highs setting up Expiration Day as a critical test of the resistance band that has capped the three month trading range.
The early weakness was based, in large part, on results announced by FedEx. The company had good results off-shore and expressed hopes for growth next year. But traders focused more on the slowness indicated by their domestic (U.S.) business. The action was so lethargic that up until the final hour, we were at a pace to be the slowest day of the year (circa 750 million in final volume).
Some larger than expected “market on close” orders made the difference, taking the final volume to just over 900 million shares.
The action was rather mixed. While the Dow and Nasdaq closed with gains, there were 500 more declines than advances. Rising volume and declining volume were basically equal.
Despite the mixed action of the last several sessions, the market remains at a key fulcrum point price-wise. The game is on the table. Will the bulls manage a breakout and seize the momentum? Or will resistance contain again, resulting in a sharp pullback? Today could be critical.
Cocktail Napkin Charting – As noted above, the market stands on the banks of the Rubicon. The technical picture is unusually complex.
There are various aspects that are normally associated with topping patterns. Yesterday, it was announced by the American Association of Individual Investors that the percentage of bullish investors had suddenly soared to 51%. That’s usually a big warning signal.
Also, on the shelf for the bears remain the series of Hindenburg Omens and the recent VIX sell signal.
The bulls are working on an inverse head and shoulders in the S&P. Interestingly, the “neckline” is very near the 1131/1133 level that marks the top of the three month trading range.
Thus, a move above that level could suggest a new up-leg in the S&P with a target count of about 1240.
That set-up leads traders to believe that a move up through that band might spark a frenzy of algorithmic short covering. That would certify the importance and validity of a breakout.
It’s Your Fault Not Mine – China posted a “Financial Stability Report” stating that swings in the U.S. dollar may threaten the global recovery.
Here’s a bit on their concerns from Bloomberg:
“When the dollar strengthens rapidly, global capital markets and prices on commodity markets are under pressure, leading to large market fluctuations and affecting the economies of some resource-producing nations,” the central bank said in the report. “On the other hand, the rapid depreciation in the dollar will cause increased commodity market prices and asset bubbles and affect financial and economic stability.”
While most of the chatter around the report deals with their comments on currency, we were intrigued by their view of
their own economy. Again, from Bloomberg:
In the domestic economy, a rebound in demand is not yet on a solid foundation and “latent” fiscal and financial risks exist, it said. Inflation expectations are rising, with the dollar, commodity prices and domestic adjustments in resource and energy costs adding to uncertainties, it said.
We Get Along Very Well – A friend passed along a chart marking the correlation between the price of copper and the S&P 500. It is rather astounding. It might also be a help for the bulls.
The two have diverged slightly in the last few weeks. Copper has rallied while the S&P has appeared to stall. The resolution would be either to have copper pull back or for the S&P to rally.
These kinds of correlations are showing up in many more asset classes. It suggests the strong influence of currencies and money flows. It also underscores the difficulty of achieving diversification in today’s environment. Too many things move in sync.
Consensus – This could be the make it or break it day for the rally. Watch the currencies. Stay very nimble.
Trivia Corner
Answer - The large dollop of logic we suggested was that the grapes had to come in lots of 10 in order for the total to be in dollars and not odd cents. So the possible number of grapes could only be 10, 20, 30, etc. for a maximum of 10 possibilities. You then knew you need some combination of melons and cantaloupes to provide correct number of items and correct amount to complement the grapes. Obviously that rules out any grape total below 50 or over 80. So with a little tinkering we
get 70 grapes, 19 cantaloupes and 11 melons.
Today’s Question - A) 118 (444) 326 B) 118 ( ) 382
Using the same principle that told you 444 belonged in the first bracket, what three digits belong in the empty bracket?
And the go-to history lesson:
AN ENCORE PRESENTATION
On this day in 1630, a Pilgrim court came down hard on one of the settlers. They ordered that he be put in the stocks, that his house be burned, that all his good be confiscated and that ultimately he be exiled. His name was Thomas Morton and they said he was a danger to society. He said (and later got an English court to agree) that they were just envious of his success.
For a while guys like Miles Standish and Winthrop and Endicott went prithee-ing about, Morton was cornering the fur trade with the Indians. The method he used became an American marketing standby - - one that in a less sensitive and not politically correct era was called "Booze & Broads."
Shortly after he arrived, he noticed that the Indians had already noted that the Pilgrims were not your basic laugh a minute guys - - and that attending one of their socials was as pleasant as having root-canal work.
So remembering the giddy youth of England, Morton picked a nice spot outside of town, put up a Maypole, broke out some jugs and invited some of town's young ladies to join him. (Wouldst thou with the "A" on thy apron followeth me?) Soon there was dancing, revelry and carryin' on. The Indians could see that this was a good deal more fun than watching some geezer polish the buckle on his hat. Soon they were flocking to Morton's Maypole and bringing furs as a gesture. Morton was getting richer by the day. So the Pilgrims raided Morton's "Ma-Re-Mount" (called Merry Mount in the court papers). That's when they shipped him off to England.
When he returned to America with a writ to have his goods restored, the good Pilgrim fathers slammed him into jail and wouldn't let him see anyone. They kept him there until he went mad and was safe to be released - - thus proving what Sister Herman Joseph said -- drinking and fooling around with girls will drive you crazy.
The market looked a little crazy yesterday but floated to a very respectable close.
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Does it even really matter anymore what with all the intermediation process devolving to a computer generated circle jerk?
How the East was won. Followed a century or so later by the West.
LOL Bread & Circuses
Wine, women and song ==> Sex, Drugs and Rock&Roll
Past Present
"Copper has rallied while the S&P has appeared to stall. The resolution would be either to have copper pull back or for the S&P to rally"
i keep FCX at the top of my screen - great tell
I was just think how significant FCX is to 499 other completely unrated large firms is...astoundingly connected.
The answer is 500
And I learned...........
Consensus – This could be the make it or break it day for the rally. Watch the currencies. Stay very nimble.
In other words, I haven't got a clue what's going on, I hope this helps.
It's strange, because looking at Art he doesn't appear very nimble to me.
I, too, get tired of this crap.
"Despite the mixed action of the last several sessions, the market remains at a key fulcrum point price-wise. The game is on the table. Will the bulls manage a breakout and seize the momentum? Or will resistance contain again, resulting in a sharp pullback? Today could be critical."
Oh yes, the market's at a key fulcrum point and today could be critical!! Yes, today is special, the game is on the table, or was that yesterday? Oh well, Art will tell us next Monday.
take out a dollar, put it over your heart... feel the beat?
It's CALLED America coming back!
Bernanke, Geithner and Paulson are beautiful BEAUTIFUL MEN! I am serious here folks.
The system didn't collapse! Got that? The doomer public was wrong!
Thankfully congress ignored the people and jammed TARP home to save America!
"Gartman: Bernanke Is A True American Hero"
"Dr. Bernanke did to force feed the banking system with liquidity back in the autumn of ’08 when it appeared that the US’ and the world’s banking systems were on the verge of total collapse into some “Black Hole” of bank runs and confusion was beyond laudable; it was heroic. He was the man for the job at the time, having written his dissertation on the Depression. He vowed not to allow the US banking system… and by extension the global banking system… to founder on liquidity."
http://www.businessinsider.com/gartman-bernanke-is-a-true-american-hero-..."
This is a truly BEAUTIFUL chart
Fixed.
I agree.Benzerker is a hero alright.
Yep Tyler,a picture of true beauty.
I admit these magnificent masterpeices capture the economic landscape in its true glory.The chart below is also suitable for framing i must add.
http://verybestcdrates.com/Articles/DOW_In_Gold_Ratio_Chart.png
Actualy, I'd say Bernokio is the Robin as Hank "The Bank Skank" Paulson was Batman.
Fair warning to you: this ISN'T the marketwatch forum
(It wasn't the avatar that gave you away, it was the same drivel you keep posting)
He's just posting to get a rise out of people. If it's not intelligent or based on some factual content, why bother to reply? Really, I don't get that. If someone says to me, "the sun isn't going to rise tomorrow" I hardly think I would waste a single brain cell with a response to that.
Obama paid poster staff guy it sounds like to me. Maybe its even Summers the Hutt himself, who knows what desperate acts these clowns will go to?
Tarathis the new zerohedge token idiot?
Nevertheless, in his way he does raise an interesting er... "point":
Central bankers are the closest thing we have to Kings. Unelected, Unaccountable and staggeringly powerful. All that they do during their reign will be hailed as heroic and divine. The few who question them will be regarded as jealous outsiders who don't know what they are talking about.
As the world contemplates the end of the reign of the current King there will be much worry and grief. The instant the King leaves everyone will talk of what a fool he was and how the new King will surely provide salvation.
They may be fighting math but in fighting them we are fighting human nature. Best not to forget it during the sad days to come...
Run along to school, we don't want to be late now do we?
What your heros did is kick the can down the road, no different than when Bubbles Greenspan kicked the can down the road in 2002 with his housing bubble, a bubble that was by design and on purpose. And while this may make you, and the masses "feel better", in reality it is only making the underlying problems of malinvestment, excessive leverage, weak capital formation and decaying labor force skills worse, and is eroding the cultural values supportive of prosperity (e.g. moral hazard, animal spirits). The next crisis will be worse than the second, which was worse than the first, and one that our country can likely never recover.
And since I assume your avatar is your child, it would behoove you to pull your head out of your ass and wake up, because your child is not going to have much of a future if this continues.
WTF... this post is a ZH social experiment, or it was written by a total ignoramus.
LMAO
like throwing raw chopped meat into a pit of lions
Come on everybody: obvious troll is obvious.
Oh no, you're telling me he's a troll? Wish you had told me that before his post made me go all in on ultra long S&P ETFs.
toathis go fuck yourself
This markets technical character is built on broken bear market signals. the H&S is a topping signal but the inverted H & S is a continuation signal, a broken inverted H & S would be bearish in this context. Technicals have lost all credibility in a liquidity driven market. is Bernanke out of ammo, that's the question.
Twice in the past 14 months we have seen big H&S bearish patterns suck in shorts only to have the market move higher. I think the H&S pattern is one of the biggest bullshit patterns out there.
Watch AAPL, forget about copper. AAPL moves the markets, as it moves, so does the market.
This kind of "technical " rambling ( I guess calling it "technical" makes folks feel like its all serious and scientific!!) is uterly useless.
The question you have to ask yourself is - Is there ANY price at which some of the high quality stocks become attractive. If your answer is - there is NO price at which I would buy ANY stocks - then you need to think about why you are monitoring market activities so closely? because you sure as hell are not going to get rich sitting in cash or bonds or in intra-day speculating in currencies and stock indices. ( well - maybe some folks will make big money time to time intr-day trading - but they tend to fade away from sight after they lose it all).
I think most people's objective is to not become poor rather than to become rich.
Precisely! I monitor the market(s) so I'll know when to run to the storm cellar and lock the door!
Art, what's the other side of that coin you are flipping?
FED owns the markets, who cares what they do? Its only bread and circus to keep the moron masses placated with their drive home to the tent city when the ABC news segment tells them 'DOW finished up 20' therefore all is well because to most all americans stock market=economy. Get ready for the implosion people, its coming.
OH, heres a story you all might be interested in. A relative was in Italy recently and the dollar may as well be covered in small pox, no banks want to take it over there and she finally had to trade her dollars for Euros at a big discount to the 'set exchange rate'. Just sayin.
.
Will the Hindenburg deliver?
Yes, 100% certainty the markets tank completely. When? Thats the only point of speculation in all this, but the endgame is certain economic collapse, 1 world govt, Bancor currency. Its already been announced, we just dont know when it will happen.
It feels like August 2007. I even heard there were stormclouds / tornados in NY.
I think we are in the 2 nd stage of denial in here, and while FED by providing liquidity will probably push the market above those levels, the econ news, main street confidence and EU blow ups might eventually refute the denial. If it happens, then just watch the Mutual Funds managers blink (with their low levels of cash...), ..that should be fun.
Market may or may not tank, but the deleverage of the US consumers will go on and the global imbalances will force.. lot's of funnies along the way.
Default, devaluation or Else a trade war byaches.
the criminals rigging this farce may very well take it higher
but the fact is that they've rendered the whole shebang a larger version of Madoff LLC
everything is just a big fraud
Starting back in April 2009 Dow 7000 Cashin was saying at least once a week that he wasn't convinced that the rally was for real, he kept saying that right up to Dow 11000. He should be ignored.
I found lots of interesting information here. I love zerohedge.
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