As we come to the end of 2014, today one of the legends in the business who rang the bell today at the New York Stock Exchage includes a guest commentary which notes an event that we have never seen in the recorded history of the markets.
By Art Cashin Director of Floor Operations at UBS
December 30 (King World News) – "On this day in 1903, one of the great tragedies in the history of the American Theater occurred. (No, it was not the 1st Madonna Concert.) It was the fire in the Iroquois Theater in Chicago.
The Iroquois was brand new and magnificent. Nothing had been spared to make it the finest in every respect. And the safest…it was billed as the nation's first fully fire-proof theater.
But the building of such a wonder had gone slower than expected. So to avoid missing the big holiday audiences of December they opened a touch early – without a few of the finishing touches.
And on this day the missing finishing touches came back to haunt them.
The theater was packed (2000 people in a 1600 seat theater). They were mostly women and children here to see a holiday matinee (Mr. Bluebeard). Backstage an arc light shorted and threw sparks on a piece of canvas scenery. No problem, the sprinkler would dowse it. But the sprinkler wasn't connected yet. No problem, use the back stage extinguisher. But the extinguishers hadn't been filled yet. The show's star, Eddie Foy urged the audience to remain calm and called for the lowering of the grand asbestos curtain. But that too had not been installed yet. The temporary curtain was cloth and it stuck halfway down creating a tunnel effect for the fire on stage. Someone opened the back stage door to get help, but thanks to the winds off the lake, that created a gust of air that blew a fireball of burning canvas right into the middle of the audience. In the ensuing panic people trampled one and other as they raced to fire doors which were not unlocked yet because safety railing had not been installed yet.
When the fire was over, 600 people lay dead and the theater management was indicted for negligent manslaughter but they were never convicted.
Traders will spend today and tomorrow watching for sparks.
One area of high sensitivity both today and tomorrow will be market on close orders. Players in index strategies often are obliged to mark to market and adjust strategies on the 4 pm closing price. Even on highly liquid expiration days, that sudden surge can cause heart stopping changes. With blank books and skeleton crews, the potential bears close attention.
Stocks Amble To A Muted And Mixed Close – Equities began the final week of the year in a rather indecisive fashion.
The opening saw sellers as fears that Greece was headed into another political and financial crisis undercut markets across Europe.
The opening selloff was a momentary event and the bulls rushed back in before the echo of the opening bell had faded. The Dow was back in plus territory before 15 minutes had passed.
The market traded basically sideways through the morning as stocks in Europe regrouped, leaving only Athens and Moscow with significant losses.
In late morning, I sent out the following note:
Stocks drift with no conviction. Bulls need a plus tick close in S&P to guarantee that this will be the first year ever that the S&P did not have three consecutive down days.
Very slow. Run rate later.
In today's Morning Money Beat, Kevin Kingsbury indicates I was in the right neighborhood but one block away. Here's a bit of what he wrote:
With just two trading days left in 2014, it’s mathematically assured that the S&P 500 will finish the year without ever having four consecutive down days. That’s never happened before in the 90 or so years since Standard & Poor’s launched its first stock index in the 1920s. (The S&P 500 in its current form dates to 1957.)
What’s more, there were barely any instances of three-day slides for much of the year. Before Labor Day, there were just four such three-day streaks, a startling testament to the lack of market volatility for large swaths of 2014.
But in the last few months, that’s changed. Since Labor Day, there have been six three-day slides, including twice earlier this month. But every time, day four was an up session.
In contrast, 2014 has brought us 11 winning streaks of at least four days, including the five-session run which ended with a 0.29-point decline on Christmas Eve.
The last four-day drop for the index was capped on Dec. 13, 2013. Even then, the S&P 500 barely notched a four-session skid, as the index that day logged a mere 0.18-point decline.
Around noon, oil began to move down. That put pressure on the energy stocks. I sent out this follow-up:
Oil slips into negative territory that puts some pressure on energy stocks, taking Dow down.
The run rate (today it should be walk rate) is paltry. At 12:15, it projects to an NYSE final volume of 540/620 million shares.
(The final NYSE volume was 550 million shares.)
The price of West Texas Intermediate (WTI) dipped below $53, making a new low for the year.
Traders had hoped that oil was in a bottoming process, having produced a series of higher lows over the last several days. The new "lower low" put the bottoming process into question.
The S&P managed to hold on to positive territory but the Dow remained under pressure throughout the afternoon.
In the closing minutes, the Dow slipped back into negative territory despite a market on close buy program that had $300 to buy on balance. In a thinly traded market, traders found that a bit odd but the close is the close.
Abbreviated Format – I apologize but the morning's comments will be a touch shorter than normal. That's because I must head to the NYSE a bit earlier than normal to greet friends and family who are gathering for my ringing of the opening bell, to mark the 50th Anniversary of my "signing the book" to become a Member of the NYSE. It has been a most interesting half century.
Consensus – Oil and Greece again weigh on equities. Traders hope to tiptoe into 2015. Stay wary, alert, and very, very nimble.
****UPDATE – KWN readers need to update the bookmarks of the King World News home page to www.kingworldnews.com
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