Tags: Cashin | S&P | China | market

UBS' Cashin: Major Stock Market Swing Ahead

By    |   Wednesday, 12 March 2014 12:09 PM

Technical conditions may point to an imminent major move in the stock market, according to Art Cashin, director of NYSE floor operations for UBS.

"Jason Goepfert at SentimenTrader.com noted that there was a strange parallel — that we had made a 52-week weekly high on the S&P and now, several days later, we've made a somewhat higher high but on negative breadth for four straight days," Cashin tells CNBC. Negative breadth means more stocks were lower than higher.

"That has happened only a few times since 1940. On some of the occasions, it has led to a selloff," Cashin continued. "This one you won't have to wait long for. If they rally over the next couple of days, then you can forget about it. If they sell off for three or four straight days, you worry."

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The S&P 500 has remained in a tight range, with support in the 1,865 to 1,868 level and resistance around 1,883 to 1,886, he notes. The market approached that level, then "tiptoed" back down, rather than spiraling down.

"There's compression on profit margins. Again, revenues have not been shooting up. So we'll be watching," he adds. "There's some small hint that bank lending is beginning to pick up. We're going to be watching that because the key thing to look for is the velocity of money picking up. You can't have inflation without velocity picking up."

A slowing Chinese economy is the latest in a long list of worries impacting U.S. and global stock markets, according to The Associated Press. China reported weak exports for February and had its first corporate bond default. The country's 7.7 percent growth was the weakest in two decades.

A drop in copper and ore prices is also disconcerting because those commodities are often used as loan collateral.

"The concern now is with so much cargo under financing, and with prices falling, collateral value will raise the prospect of margin calls and therefore defaults," Evan Lucas, market strategist at IG in Melbourne Australia, tells the AP.

"Markets remained nervous after more bad news came from China," Mizuho Bank Ltd. in Singapore says in a commentary, AP reports. After recent disappointing trade and credit data "concerns on China's recovery have not waned, though we feel the fears are overdone," the bank stated.

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Technical conditions may point to an imminent major move in the stock market, according to Art Cashin, director of NYSE floor operations for UBS.
Cashin,S&P,China,market
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2014-09-12
Wednesday, 12 March 2014 12:09 PM
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