A trader at the
The stock market had a rip-roaring start to 2017, but that may be
about to come to an end.
Riding the so-called Trump trade to new all-time highs, the Dow
Jones Industrial Average just barely missed hitting the 20,000
milestone. However, stocks have been backing off from their highs
and the Dow is now roughly 200 points away from the elusive
In fact, for a while on Thursday the Dow went negative for the
year, dipping below its 2017 opening price of 19,762.
According to trading legend Art Cashin, the director of floor
operations at UBS, the fade over the past few weeks portends a
rocky near-term future for the market.
Cashin said a dip into negative territory after gaining to
start the year is a “rather frequent pattern but it can be
bothersome” and cited a note from Jason Goepfert at
SentimenTrader about what it usually means for the market. From
Goepfert via Cahsin’s note:
“The Dow is negative year-to-date. The drop on Thursday marked
the first time in 2017 that the venerable Dow Jones Industrial
Average was negative for the year. Going back to 1900, there were
a handful of times that the index last 2-3 weeks into a new year
before turning negative YTD, and it tended to lead to even more
weakness as nervous traders sold.”
Thus, for the near-term is appears to Cashin that the 20,000
level and further gains for the stock market may be out of reach.
“Historically, it was not a warning of calamity but more a
harbinger of weeks, or even months of struggling,” wrote Cashin.
Of note, the market started off 2016 by tanking and causing
concerns of a recession or economic calamity. While the selling
did start in earnest just before the new year, the weakness
subsided and the indexes staged one of
the greatest comebacks in market history to finish the
first quarter in the green.
“Verbum Sat Sapiente,” concluded Cashin, which is Latin for
(roughly) “Word to the Wise.”