It appears that the number 7 will most likely play a huge role in the future direction the stock market.
A portion of today’s note from legend Art Cashin: A Calendar Caution – In his latest edition of Macro Tides, Jim Welsh alludes to the calendar pattern of years ending in the numeral seven. Here’s a bit of what he wrote:
As discussed last week, the market is entering a window of time that has coincided with tops in years ending in 7 and during the last 20 years. The Decennial pattern suggests that a top in the S&P is likely within the next few weeks, if the pattern in years ending in 7 holds true. The trading pattern in the last 20 years also supports the potential of a top in the S&P soon. Both patterns suggest a decline is coming that could last until late October or early November.
The good part is that we should know within a matter of weeks.
Two Other Possible Cautions – Sharp-eyed Jason Goepfert of SentimenTrader dug into his prodigious files to look for action that’s analogous to what we’ve been seeing. Here is what he wrote:
Diverging Dows. The Dow Industrials continue to power to new all-time highs day after day, while its brother index, the Dow Transports, fall almost as consistently. The Transports are down 6% since mid- July and within spitting distance of its 200-day average. When the Industrials have hit highs and the Transports fell to within sight of its 200-day, both indexes had great trouble sustaining any further gains, with horrid returns over the medium-term.
Mom and pop don’t care about that. According to the latest AAII survey, individual investors are now holding their lowest cash allocation since 2000. They are now among the most invested in financial markets since 1988, while those markets are near historic levels of overvaluation. The three other time periods with the lowest cash allocations, in 1998, 2000, and 2015, all preceded times when those investors probably wished they had more of a cushion.
Overnight And Overseas – It was a mixed session in Asia. Tokyo and Hong Kong saw modest gains while there were dips in India and Shanghai.
Europe is seeing mild pressure across the board. London, Paris and Frankfurt are all seeing modest losses.
Crude is holding its own after API reported a jump in crude inventories but a sharp drop in products and distillates. Gold is off slightly while the euro firms against the dollar. Yields look unchanged.
Consensus – Futures say we will cross Dow 22,000 on the opening. Will it be a “touch and go” or will the bulls circle the wagons? Stick with the drill – stay wary, alert and very, very nimble.
***KWN has just released the remarkable KWN audio interview with Bill Fleckenstein and you can listen to it by CLICK HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Another Major Warning That Trouble Lies Directly Ahead CLICK HERE.
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