With stocks tumbling, bonds and gold higher and the dollar flat, here is a (warning) word from the wise.
Stock Market Rally Coming To An End
February 7 (King World News) – Here is a portion of today’s note from legend Art Cashin: A Word From The Wise – Our former floor comrade, Mark Newton, is a noted market technician. Here’s a bit from his respected overnight market summary:
Yesterday was the first real evidence of at least a minor stalling out in the market. We saw a small downdraft which was nearly completely recovered, yet breadth still showed more declining than advancing issues to the tune of 3/2 negative. Admittedly, little to no damage was done by the close of trading and Wednesday finished with a very narrow range overall. In the short run, the following seem to be important factors which would suggest this rally is coming to an end:
1) Cyclical importance of reaching last years major lows made on Feb 8/9 and now we’re approaching a significant one-year anniversary along with a 90 day interval from our early November 2018 highs. This can have importance in causing a turn
2) Breadth stalling out – We’ve seen a very good move in the last 5 weeks, but prices are getting up near important resistance from a price perspective and now time is coming together as well just as we’ve begun to see more Declining than Advancing issues. While uptrends are intact, seeing 2-3 days of negative breadth would constitute a definite warning on this rally stalling out
3) Demark exhaustion should be in place by Friday 2/8 into early next week 2/11-2/12. These indicators have been powerful in recent past in signaling the start of at least a minor slowdown in stocks
4) Financials not acting well – This group turned down last week and has not followed Technology’s lead. 10-Year Treasury yields are also turning lower.
Overall, Wednesday’s price action is not sufficient to sell into this move as little to no weakness occurred. However, movement up to 2745-60 in the next 3 days would be an interesting area to consider buying implied volatility.
Overnight And Overseas – Among Asian equity markets, Hong Kong and Shanghai remain closed for the Lunar New Year. India was open but traded virtually unchanged. Tokyo closed with a modest selloff.
In Europe, London is almost unchanged amidst a new round of rumors on Brexit. Markets on the continent are seeing moderate selloffs.
Among other assets, Bitcoin firmed a bit and is now trading just above $3450. Gold is a bit lower and crude is also weaker. The euro is a touch lower against the U.S. dollar and yields are down a tick or two.
Consensus – Some weaker data out of Europe have markets over there sputtering a bit. That has spilled into U.S. equity futures.
Things could get a little dicey if the bears push the S&P down below 2685 (that’s a long shot). Stick with the drill – stay wary, alert and very, very nimble.
***Also just released: Gold Breakout Targets $1,850 And Beyond CLICK HERE TO READ.
***KWN has released the powerful audio interview with Gerald Celente and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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