Art Cashin On The Possibility Of A "Christmas Rally", And The Certainty Of "The Post Christmas Crash" That Will Follow

Tyler Durden's picture

Are we going to get a Christmas Rally in stocks? Perhaps. So thinks Art Cashin quoting Tom DeMark (whose predictions lately have all been about as good as those of another Tom: the infamous Stolper from Goldman Sachs). Either way, any fake rally for purely Career Risk purposes (most hedge funds still underperform the market with two weeks of trading left in the year) will be met with an even more aggressive sell off in the new, "no fiscal stimulus" year. Aka: "the bill."

From Art Cashin:

Forget Heads And Shoulders. Could Those Be Reindeer Hoof Prints On The Charts? - As the S&P grappled with resistance around the 200 day moving average, two veteran technicians hinted that the Fed rescue rally might yet morph into the Santa Claus Rally.

Tom DeMark, creator of several key indicators, thinks that the S&P could rally back up to 1350 just before Christmas. He’s not all sugarplums however. Here’s a bit from a Bloomberg interview:

“The market should top out around Dec. 21,” DeMark said today. “The market rhythm and market balance equilibrium all require the market rally. Once that’s completed, the market will have a vacuum on the downside and we should have a sharp decline.”

Walter Murphy, another legend, in the technical crowd reached a nearly identical conclusion for a variety of other reasons.

Stocks: A coming short term peak (arguably later this month) will probably put pressure on – and ultimately lead to a downside reversal of – the medium term trend. At that point, all degrees of trend – near-, medium-, and long-term – will have a bearish bias

So, a breakout through the resistance around the 200 DMA in the S&P could result in sleigh bells and Santa Claus. Then comes the bill.

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EscapeKey's picture

There won't be a crash. The PPT will see to that.

So much for a "free" market.

Pinch's picture

Or will 2012 be the year the bill comes due? I hope so.

Deo vindice's picture

The can has been kicked about as much as one can.  Time to pay(up) pals.

SheepDog-One's picture

There wont be a crash again, EVER?

GeneMarchbanks's picture

Lesson of 2008: All can crash, $, €, bond markets globally but not the 'market'. Everybody watches the 'market' with wide-eyed anticipation now... when Lord? When?

Popo's picture

Those are both near-term calls.   Very dangerous stuff.   It's not quite the same predicting a near term bull, and a medium term bear market.    Predicting a strong December and a weak January is basically a bet that the market is about to turn on a dime.   Typically those kinds of predictions are almost always wrong.

If 2012 is going to kick off with a selling frenzy -- you can bet a decent number of funds will sell early, and there goes the Xmas rally.

Anyone attempting to time this is insane.... which is why the market will probably shit the bed sooner than those underperforming "analysts" predict.


And then there's this, from Charles Hugh Smith:

SheepDog-One's picture

Definitely, anyone thinking theyve got this all figured out and will frontrun the Maniacal Monetizers at their own rigged game must be insane.

blunderdog's picture

I don't see a strong case for either rally or crash.

If Greece is supposed to be rolling 8 billion Euros in bonds the week of 12/19, and there's no workaround in place by then, how could anyone predict the effects that'll have on US equities?  If that's the start of true crackup of the Eurozone, seems to me there are a few too many moving parts to call that bullish or bearish.

lizzy36's picture

Santa Claus rally = Money Mangers Bonus Season.

The headlines will be hilarous. How problems are ALL solved, the US is best of a bad bunch, GDP to grow by 5% in 2012, BLAH BLAH BLAH.

No where except Zerohedge will the headline read, Money Manager need to beat their benchmarks/high water marks, to avoid getting fired and to make their BONUSES.


SheepDog-One's picture

Enjoy the last bonus season bankers, spend it wisely, this is your last one.

Deo vindice's picture

" . . . spend it wisely. . ."

Agreed. I will buy my wife some silver and she will reciprocate.

tonytiger's picture

Could it be that the Santa Rally has already come and gone???

wareco's picture

Excuse me, but didn't ZH just say that the FED is turning dovish, and QE3 is right around the corner?  Doesn't sound like a crash is imminent to me.

SheepDog-One's picture

Even saying there is 'QE3', how long does that last? A week? And then what? Lets face it, its hardly 2008 anymore.

Tyler Durden's picture

What is the catalyst for QE3?

SheepDog-One's picture

Nobody cares about munibonds, at all.

GeneMarchbanks's picture

Jefferson County would indicate otherwise.

flattrader's picture

It will need to build some...a few more need to warn or default.

BurntPinky's picture

I think the QE3 bazooka will shoot blanks because:

Although Bernanke is flooding the market with funny money, the rate of deleveraging is occuring faster than the Fed can monetize.

Real unemployment is rising. Housing inventory is decreasing, but prices are still falling. The housing market is bigger than the gold market.

When the Euro crashes, currencies will still be in demand. The dollar is the least corrupt currency. The demand for dollars will outstrip the demand for gold when the Euro crashes. Hence, a Euro crash will be deflationary.

QE3 will not be able to stop the run into the dollar when the Euro crashes. The Fed would have to monetize US debt and Euro debt to stop the run into the dollar and keep the Euro afloat. My money is invested in deflation because I believe the Fed will blink when it come to actually hyperinflating. Not that the Fed wouldn't hyperinflate, but the pressure of further downgrades to treasuries will be too much risk for the Fed to take on.

Bernanke has been saying that the Fed can't do it alone. He's positioning the Fed to be able to say, "We're doing our part" when the deflationary crash begins. He's not making grand public appearances to explain how the Fed is going to save the economy. With QE1 he was on 60 minutes.

He's changing the optics. He knows he can't turn back the deflationary forces if Congress doesn't get its act together. If there's any safe bet out there, it's that Congress won't get its act together.

DUNTHAT's picture

Think of the Fiscal situation.  If interest rates go up even a little the Govt deficit will explode even greater than it is now.  That's when we get hyperinflation and the dollar goes down the drain.  Until then Ben will be happy with deflation, ZIRP, and 1 1/2 % growth.  because the alternative is catastrosphic.

gatorengineer's picture

Barrack Insane Obamas re-election........... Not that they really need one.

J 457's picture

Catalyst for QE3 is a significant decrase in market value.  More QE will be a tough sell at DOW 12,000 and 8.6% unemployment, as one would argue we are in recovery and making progress.  I don't subsribe to that opinion, but the logic will be; why QE if all is well.  Also, oil neds to come down before any QE, otherwise we'll have $130 WTI and that will choke off any hope of recovery.

Shizzmoney's picture

It won't be THE crash, but you'll have a similair week like we did in August when we saw a -200, -400, and -525 loss in the DOW, as well as S+P losses. 

This will then be the perfect excuse for QE3, and they'll be saying QE3 is a must have "stop gap" masure to save the economy.

Things will limp along until Jan 2013.  Then The Crash probably happens.

AngryGerman's picture

Santa is coming to town and bringing shitloads of bonuses with him!

I am Jobe's picture

Tyler- Here is something to publish

SEC being sued.

hugovanderbubble's picture

29th december big turning point according to BRADLEY METHODOLOGY..just for advice....

AngryGerman's picture

yeah, it's a turning point. Soon afterwards its 2012...

hugovanderbubble's picture

Thx Wharf for Crawford back up stuff.

I am Jobe's picture

Hey I am waiting for Stan Clause to drop in. I have the Wild Turkey Ready. Does this mean there is no more Waffle Makers on Sale? Damn, missed the sale.

Long-John-Silver's picture

If you only now realize you missed the Waffle Maker sale you came out ahead on the deal. All those Waffle Makers have already quit working and are resting in land fills.

I am Jobe's picture

How about Spare parts- Any market for that?

ExistentialSkeptic's picture

Hey, don't spit on the waffle maker.  Anything that can turn a little flour, milk, eggs & butter into a meal on little electricity is a nice thing to have in the closet.  Pantry prep, bitchez!

Cdad's picture

Is The Street that stupid?  Seriously, you have to ask.  Would they stack capital on this absurdly "bailout" hope driven tower of nonsense rally in hopes of getting a good print...which they perceive to be career saving?

Place your bets, ladies and or red.

This market has been so utterly destroyed, it is staggering that there is even a functioning shell of it left.

Robslob's picture

The last 2 QE's came after strong downward moves...or maybe the downward moves occurred because those "in the know" felt safe selling with a guaranteed bailout to run it all back up?

We all know these guys just hate holding equities for more than a day or two...or is it seconds now...riveting!

Waterfallsparkles's picture

Just like the Thanksgiving Rally that never came.  Everyone was caught flat footed as we saw huge declines.

It seems that Wall Street always does the direct opposit of what is expected and simple logic.  That is how they make so much money.

Dr. Engali's picture

I have yet to see anything happen in the market when everybody has looked for it. My guess is there are going to be a lot of hedge fund managers out of a job.

Robslob's picture

" My guess is there are going to be a lot of hedge fund managers out of a job. "


Hard to be out of a job when you are the boss?


Hedge Funds run the world dontcha know....

Waterfallsparkles's picture

Also, makes me wonder if that 900 point rally last week was the Santa Clause Rally.  Just a little early.

I am not sure we can climb another 900 points in a few weeks.

monopoly's picture

How can you possibly have  QE whatever with the Dow at 12,000?  Would never fly. Averages look good to most sheeples. Never mind NFLX, RIMM, and on and on.

I am Jobe's picture

How about Black Friday every Friday till the end of the year? Now that is what I call competing with Greece. Whay stop partying. One big Orgy party in the USA.

Spastica Rex's picture

Consumermas should be 90 days long with regular shopping bacchanals spread throughout.

lizzy36's picture

Spain and Italy have EUR750B in debt to issue in 2012.

EU banks have north of EUR1T in  debt to roll in 2012.

Does Summit 15 address this looming funding disaster. Does it address the lack of growth in the EU?

But yes that tighter union being proposed by Merkozy, you know the one that will take 2 years to actually come together, sure is awesome.

DeadFred's picture

And in the other corner you have the Fed, known to print trillions to protect the banks and restrained only by the dim threat that congress and the president might get pissed off enough to change the rules that allow the Fed free rein. There are two 800 pound gorillas in this fight and I can't predict who wins. Be certain though that the 99% will lose either way.