On the heels of recent volatility in global markets, this is why the stock market is gyrating, again.
May 15 (King World News) – Here is a portion of today’s note from legend Art Cashin: Another Pair Of Eyes – My friend, and one the Floor’s favorite chartists, Mark Newton, opined on the recent action in his advisory letter overnight.
Here’s a bit of what Mark wrote:
BOTTOM LINE: No change to this- Trends are bearish and momentum still hasn’t gotten sufficiently oversold to suggest lows are in place. While volume was very heavy on the downside, which often can occur close to lows after an extended decline, it looks right to stay defensive until prices can get either down to 2785, or manage to rise back up over 2862 on a close, which is the first real level of upside importance. As written about last week, downside should be limited to 2775 with a few targets at 2785-7.
Overall, Yesterday’s rally seemed constructive based on price points gained alone. However, by the close, SPX had failed to take out the prior day’s highs, and both volume and breadth were below that seen on the prior day. Given that Tuesday was moderately positive while Monday was a negative, this simply means that Monday’s decline occurred on 6/1 negative breadth, while on Tuesday, we saw just under +3/1 positive. Overall not a bad reading, but compared to Monday when over 90% of the volume flowed into Down vs Up stocks, it would have been better to show equal strength on yesterday’s rally in both volume and also in positive breadth. Additionally, there wasn’t any real breakout of the downtrend which has been in place since early May. This initially hits near 2850, but as was written above, I am looking for a move over 2862 on a close to have confidence of a low at hand. For now, there stands a chance that lows can certainly be retested, as nothing with regards to yesterday’s bounce changed the structure.
Mark finished by noting some of the mileposts he’ll be looking to.
Overall, it’s imperative to have some selectivity until stock indices can demonstrate that this recent decline has run its course, either by breaking out above downtrends from early May (coinciding with a sharp decline in Treasuries as yield start to rise along with the Yield curve) and/or start to see some of the more risk-on type movement return to markets. Technology stabilizing would be a big plus, along the Chinese Yuan, with Crude oil and USDJPY also starting to turn higher. For now, insufficient evidence is present that markets are there, so we’ll still remain defensive until more proof arises.
Overnight And Overseas – Most of the Asian equity markets closed higher, partly catching up to Tuesday’s rebound in New York. Tokyo and Hong Kong saw moderate rallies. Shanghai spiked higher, closing up nearly 500 Dow points. India went the other way, closing with a moderate selloff.
In Europe, London is fractionally lower, while markets in Paris and Frankfurt are seeing modest losses.
Among other assets, Bitcoin has shrugged off a modest pullback and is again trading above $8000. Crude is a bit lower as an inventory surge appears to outweigh tensions with Iran. Gold is basically flat as is the euro against the dollar. Yields are down a tick, or two.
Consensus – Traders will monitor any comments to confirm or dispel the current assumption that Mr. Trump “got the message” from the market. It is critically important.
I remain very concerned about the risk of an accidental military misstep around Iran. It would not likely remain a localized event and could quickly spread to Israel or the Saudi oil fields.
Traders think Trump has about a three or four month window on a China deal because of the looming election.
Stick with the drill – stay wary, alert and very, very nimble.
***KWN has now released the powerful audio interview with legend Pierre Lassonde and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***Also just released: SILVER BREAKOUT: Grosskopf – As The Cinderella Story Ends, Gold Will Benefit CLICK HERE TO READ.
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