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Art Cashin On Roller Coaster Commuting And Early 2012 Trading Patterns
We are always amused by technicians trying to predict what the market will do based on something that may have happened some time in the past, when in reality the only thing that matters is the distinction: "Pre-Central Planning" and "Post-Central Planning" or PCP (for both) - in other words, anything prior to 2009 is completely irrelevant when it comes to analyzing the market. Yet people continue doing it. And while the predictive pattern of such formerly "self-fulfilling prophecies" is now gone, courtesy of whatever side the Chairman wakes up on, traders habits die slowly. Here is Art Cashin with his summary of what trading patterns are relevant for the new year. That said, we remind readers that the first trading day of 2011 saw the S&P rise from 1257 and close at 1272, something which #CarbonCopy2012 seems dead set on imitating. After all, with central planning, why recreate the wheel - Brian Sack can just hit the "repeat 2011" program button and all shall be well. All the way up to a 2012 year end close at 1257.
But first, here are Art's comments "Commuting by Roller Coaster"
A Year Of Commuting By Roller Coaster – In Wall Street watering holes, there’s been an old saw, used for decades, to demonstrate that statistics can be less than useful and sometimes misleading. The old saw is the fact that – mile for mile, the safest form of travel in the United States is riding a roller coaster. The point being that while commuting by roller coaster may be exciting, safe and even fun, it doesn’t get you anywhere.
The stock market events of 2011 reminded veteran traders of the old saw. There were stunning ascents, heart stopping plunges, mind numbing turns - and at the end – you wound up just about where you started and the ride cost you money. That was 2011 in a nutshell.
Friday’s action looked like the year in miniature. The first half was the best part, then a mid-session give up followed by choppy attempts at recovery, only to slump to a close. That put the S&P almost exactly where it had started the year.
And now, some pattern spotting:
Trading Patterns In The New Year - Wall Street lore is filled with patterns, both real and imagined, that impact or affect the trading in the opening week of the year. The foundation of many assumptions is that “new money for the New Year” (pensions, et. al.) is ready to flood into the market and lift prices.
Even though the pre-opening futures make that look “dead on”, history is not so re-assuring. Here’s what the sharp-eyed veteran, Jim Brown, noted in this Premier Investor Newsletter:
Of the last 15 years there have been an almost even number of up days and down days (8-7) on the first trading day of the year. It is hard to see a trend there. If we extend it to cover the first week it remains a dead heat.
However, if we look at the end of January compared to the first day of the year the Dow is down 10 times and up only 5. Looking even closer there was a significant sell off in January 12 out of 15 years. In some cases they lasted only a week or so but they were normally significant program driven declines. Once the year end money was invested a sharp selloff appeared to capture profits. I speculate the hedge funds were invested ahead of the retirement fund pop for mutual funds and the hedge funds took profits when it was over. The pattern is very well defined.
Jason Goepfert, of SentimenTrader found a pattern triggered by the kind of air-pocket selloff we saw on Wednesday and a more positive beginning to the New Year.
The reason that there’s so much attention to how the year opens is the First Five Days pattern, researched by Yale Hirsch of the “Stock Trader’s Almanac”. Of the 38 most recent years that the first five days resulted in a gain, the year, itself, was up 86.8% of time. The pattern is a bit less successful when the first five days are down. That’s got a 50/50 yearend predictive value. The “First Five Day” pattern is one of the most widely discussed, maybe right behind the Super Bowl pattern.
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This.
I like the "PCP" moniker for "post-central planning" too -- it is likely a better descriptor of just what TPTB are feeding the system than any other drug. From Wikipedia (fixed):
Sounds about right to me....
Welcome to the Angel Dust Economy.
Enjoy your trip.
"In Wall Street watering holes..."
I'll bet ol Art has seen a few of those in his days... Cheers AC!
I love Art but the S&P 500 is right where it was in 1999. Gold in 1999 was at $285 and now it is at $1,593. Stock people always say "the trend is your friend" yet they ignore the longest, strongest trend of the last dozen years! Special thanks to the ZH reader who mentioned comparegoldprices,com.
Futures up on nothing. Zero Volume. No buyers only bidders.
Looks just like last year except without my money in it anywhere.
WOW look at em ram everything up 2% on nothing! They really need some 'volatility' to trade it seems.
Yeah... It basically goes like this...
- The first day is a tell for the first 5 days
- The first 5 days are a tell for the rest of the month
- The first month ius a tell for the rest oif the year
- If the market is down... Pin your hopes on the Superbowl Index
- If the wrong team wins the Superbowl, then start pointing to Super Tuesday
- If the wrong candidate wins, then switch on the HAARP machines
- When media coverage subsides on that, then put G-Pap on the microphone
- If it's not a World Cup Soccer year, then hopefully it's an Olympic Year
- Oh good, it's an Olympic Year... That ought to get us thru to Jackson Hole
- Since Jackson Hole co-incides with the RNC & DNC, get all your ducks in a row
- Sprint to finish
- PRINT MORE MONEY
- THEN GO PRINT SOME MORE
Sounds about right.
Man, you're on fire here. You oughta writa book...entitled, 'YEAH..It Basically Goes Like This.'
And, my fave was The Sign Of The Trader (aka, World Headquarters to our bunch), which back in the day sold more vodka than any other bar in America.
"The point being that while commuting by roller coaster may be exciting, safe and even fun, it doesn’t get you anywhere."
like arguing with my ex.
wait... that's not exciting, safe, or fun. but the destination is the same.
20 kg of gold left on the train in the suitcase...how could I have forgotten it there?
http://www.bbc.co.uk/news/world-europe-16392922
I dream of finding someone's stash almost every day.
Buy a metal detector and a flack jacket and go take a few trips in your neighbours gardens.
If you can pick this one up for me at Paris, I will give you 10%
No shit... If "the train" they're talking about was in the CHUNNEL, we'd really have a story...
can happen to everybody.
I once even lost my cell phone on the train!
Hey, Paris is not far away from Belgium....can you do me a favor and get it for me?
I spraypaint tungsten bars & leave them on trains in gymbags just for kicks...
Look at the dow rock!!!!
Why not? They still got money to burn
and the USD drop! *Hat-tip* btw to you and Sheepdog-One on your no QE3 call. Seems like the FED, PPT and TBTF banks will make it illegal for the market to drop during this election year.
Theres no use for QE3, theyll just ram everything 2% or 3%...all the same no difference, they just went underground!
I'll take a small bow too on that no QE call. Join me?
thanks blythe
It's not driven by S&P action.
That's all oil.
The stock market is now only an index of anticipated monetary policy rescues and bailouts. For 2012 call it the QE scoreboard. It is no longer connected to the real economy in any way as a discounting mechanism for earnings growth and GDP growth rates. There really is no business cycle in a fully Fed-controlled economy.
Excellent descripton of the current market model. To much confusion about the market, our economy and things such as fundies.
A scorecard on QE probability. I like that; kind of way to focus on what is really being represented and clarifies the BS. So when the world economy teeters on the edge and things look like they're going to hell in a handbasket, it makes sense for the markets to rise as these condidtions are a nice precursor to QE.
Thanks. This makes sense. Today the scoreboard says QE +200!!!!
Yup. That's part of the Japanification plan writ large: 20 years of sequential bailouts, interventions, QE, stimulus and in the end...monstrous debt to GDP which means in other words a downsized ailing economy with propserpous bankers
There really is no business cycle in a fully Fed-controlled economy...
& I'm guessing that that was basically the WET DREAM of the Jeckyl Island crew...
And in 1912 Dec the Jeckyl Island Crew said 'We've got a 100 year plan'....finished.
exactly. even if the FED charter were to expire this year (which many a ZH said it is infinite) Obama would sign to renew it in secret on the golf course just like he did signing the National Defense Authorization Act to rape away all our remaining civil liberties. FED #winning!
You can bet on one thing... Whoever comes out of the RNC & DNC conventions as the nominees will BOTH be on board (just like Woodrow Wilson was)...
Unless, of course, it happens to be Ron Paul, in which case he'll be guided through the kitchen corridor or by the book depository on his way to the limo... & the rest, they say, is HISTORY...
The fucking clown show continues on Wall Street as the whores play more games to further distract the American people from the reality. Oil up $3.50 and stocks up 250 Dow points. I guess retail sales (70% of our economy lol!!) and overall buisness conditions will do better with $5 a gallon gas. Almost like watching a comedy routine.
We watch and we wait! Patience has it`s rewards!
Give me a break, Art. The ONLY pattern that has mattered for the last two years is the GAP OPEN pattern...which is wildly sold by criminal syndicate Wall Street firms with HFT computers.
I'm afraid Art is just another name on the funeral pyre of this market and its complete lack of any credibility.
Yep here we go again. Gap ups all over the place. The big money manipulation machine going to town selling into the frenzy as the blind follow the blind to the cleaners. People just never learn. Buying like madmen near major resistance levels is a fools game. The bulls hopium rally to start the year will sour once again when the gaps fill. I think that 2011 has so screwed the market`s sense of perception that they are like drunken men stumbling all over each other. Their brains are completely impaired. They already forgot about the crisis in Europe.
Pro growth recession in Europe, is bubblicious.
#btfd2012
Look at BAC, again. $5.83 and just getting slammed higher.
Wow, that's natural.
My god, what a joke.
i think this indicates that the stupor bowl w/ be decided in OT
DUK and MO gapped down. Big div payers. What gives?
Hmmm. Dow seems to having a bit of trouble maintaining levitation. 80 pts off the HOD. Imagine what a red finish today would do. Almost too delicious to comtemplate.
Technical trading is a self-fulfilling prophecy: they all see the same thing and react the same way (e.g. they all see the market going lower, so they all sell, so the market goes down). Since there are so many of them it kind of works.
"An investment is a trade gone wrong".