Today legend Art Cashin noted one of the greatest sell signals on the stock market you will ever see in your life.
August 17 (King World News) – Art Cashin, Head of Floor Operations at UBS: In a small clarification – Much of Wednesday’s afternoon trading session was engulfed with a bit of a mystery. There were rumors about that a “Wall Street legend” sighted a “signal” in the NDX that might be flashing quite bearishly.
After an extended time of searching and aided and abetted by our own in-house version of Nancy Drew. Wonder Woman was able to help us unravel what apparently may have been going on. It appears that the fabled Peter Eliades (a true Wall Street legend) appearing on Neil Cavuto’s Fox Business show may have cited a negative “condition” in the NDX. Here, again, we need to cite the key difference between a condition and a signal. A condition is something like overbought or oversold and that condition may persist for a period of time without instantly triggering a market reaction.
At any rate, with some apparent paraphrasing, this is what Wonder Woman and the Friends of Fermentation were able to dig up:
“Peter Eliades is looking at the ratio of NDX / DJIA. Only 3 times since 2000 has the ratio gotten to .45 or 45%. After it hit .45 in March of 2000, the NASDAQ dropped 24.5% in 11 trading days. The NDX / DJIA ratio hit .45 again in November 2021. Markets peaked soon after. The ratio hit .45 again on July 14, 2023. He’s saying that the market is as overvalued as March 2000. Peter said that at .45, he’d be a big seller in the stock market.”
And, in addition, that appears to possibly reinforce some commentary from the likes of the insightful and charming Katie Stockton and Louise Yamada. Two of our absolutely favorite technicians. (If the gender police would turn their heads for a minute, I came from a generation where it was not only proper to make note of the intellectual power and insightfulness of some of our female co-workers, but also use the word charm because of the natural graciousness they exude. So, forgive me if it is a generational gap. Both of these wonderful ladies are very insightful and intellectually compelling as well as, if you will forgive me, very, very charming.)
As a rough example, each separately cited:
Hi Arthur, I wanted to flag to you that the NASDAQ-100 Index (NDX) is poised for its first weekly MACD “sell” signal on Friday since flashing a “buy” signal on 11/11/2022. The signal reflects a loss of intermediate- term upside momentum, which was foreshadowed by the DeMARK Indicators® (per the attached comments from 7/26 re: QQQ). The setup supports several weeks of corrective action, at a minimum. We expect more of a bounce in the days ahead, and it may afford an opportunity to reduce exposure temporarily to manage increased risk of a deeper downdraft. First major support is NDX ~13,834 from a Fibonacci retracement level. More detail to follow in Wednesday’s report. Best, Katie
I don’t know about Peter, but NDX has been on a daily MACD sell and has recently, this week? Registered a weekly MACD sell, so yes, vulnerable. Cheers, Louise Yamada
At any rate, back to actual business. So, the next process we will need to review is when did the negative condition in the NDX first appear and when did Peter and others first begin the cite them.
Back to overnight.
Overnight, global equity markets are somewhat mixed but with a distinct leaning toward the cautious. In Asia, Japan closed down the equivalent of about 120 points in the Dow. Hong Kong was virtually unchanged, and Mainland China was even up 100 points. India, however, was down about 130 points.
As we go to press, London is down about 100 points in the Dow. Paris is off about 80 and Frankfurt is off about 25 points.
The U.S. economic calendar is only moderate. It being Thursday, we will get Initial Jobless Claims and the Philly Fed Business outlook and then, in midmorning, we will get E-Commerce Retail Sales and Leading Indicators. At 10:30, the natural gas inventories and then, obviously, at 4:30, everyone will rush to see what changes have
occurred in the Fed Balance Sheet and if quantitative tightening is continuing. We will have to dig further into the NDX negative “condition” and see if we can find out exactly how long that condition has been in effect and possibly how long in the past has it been in effect without triggering anything. So, we will get out our pencil sharpeners and doublecheck.
You know the current drill. Stay close to the newsticker. Keep your seatbelt fastened. Stay nimble and alert and most of all try to keep safe and keep your eye on yields. Once again, apologies for any misquotes, misattributions or mistakes. As we go to press, the yields on the ten-year is right around 4.30% and we believe above 4.30% is a bit of trigger for equities, but, at any rate, as we said, stay safe.
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