Monday, March 1, 2010

Market Commentary By Art Cashin March 1, 2010

On this day in 1944, in the pre-dawn chill, a freight train pulled out of Balvano, Italy. Now this was not a particularly good year if you lived in Balvano...or anywhere in Italy. As you history majors will recall, 1944 was a very active year in something called World War II. The Allies had landed in Anzio and were busy killing Italians to get them to surrender. Meanwhile, the Nazis were busy killing Italians to prevent them from surrendering. Thus the over/under on being a current Italian citizen was not quite a chalk bet.

That brings us back to Balvano and this day. As that freight train pulled out, several hundred of the local folks, hoping to find a place better or safer, scrambled aboard the freight as it slowed on its first upgrade.

But the train was not quite the Silver Bullet. As it chugged along, it labored and labored behind its double locomotives. You must was war time...the locomotives were like Spam cans and the coal was somewhere between Bituminous #1 and kitty litter.

So, it was little wonder that when the train reached its steepest incline...inside the long tunnel into Mt. Armi, it ground to a halt. Some think the train crew simply decided to wait and re-stoke the locomotive fires. In the meantime, aboard the train, atop the boxcars and inside them, people slept soundly dreaming dreams of escaping trouble. But as the crew waited and the stowaways slept, the locomotives belched carbon monoxide into the tunnel. In less than an hour, the crew and 420 free-riding passengers of this freight train lay dead in one of the worst train calamities in history.

No crash. No falling bridge. No derailment. Just a 45 minute delay. All in the control of professionals. Markets fretted about the control of professionals last week. The video-op that was billed as a “Health Care” summit did little to reassure trader types that Washington was resolving issues.

Snowstorm Slowdown Bailed Out By Re-Weighting On Close – While the NYSE floor was pretty much fully staffed, phones conversation hinted many offices around the East Coast were operating with skeleton crews. The lack of volume in the first five hours of trading underscored that perception.

Stocks began Friday somewhat hesitantly despite some theoretically supportive data. GDP improved slightly and the Chicago ISM looked solid. Just before 10:00, the University of Michigan data held firm, countering the plunge in Consumer Confidence that had grabbed headlines days earlier.

The muted reaction to economic data changed with the release of Existing Home sales at 10:00. Home sales fell over 7%. That temporarily stunned the stock market and bids disappeared quickly. The Dow fell to -50 in less than ten minutes. It was then that reports circulated of yet one more Greek rescue plan. This time it was to be key German banks to the rescue. The knee-jerk result was a dip in the dollar and a mild uptick in the Euro. That, in turn, brought bids into stocks, oil and gold.

In stocks, it was a less than formidable move. The Dow floated back into plus territory and then went into a virtual trance.
Stocks somnambulated sideways in low volume. There was even some concern that an Olympic hockey game might
distract more and further slow trading. That concern dissipated when the game began in a lop-sided fashion and traders
returned to the boredom of the stock market.

Up until about 3:15, Friday’s session looked to be, maybe, the slowest of this year. It looked like it could not surmount the
paltry 888 million of January 14th. But a surge of “market on close” orders (to accommodate re-weightings) took the final
volume above a million. Yawn!

For today, the napkins suggest support at 1088/1092, with a backup at 1080/1083. Resistance looks like 1106/1110 and
then 1114/1119.

Today – First trading day of the month has a mild bullish bias (new money in IRA’s, pensions, etc.). Overnight, there are,
yet again, rumors of a Greek rescue package. That has boosted the Euro and softened the dollar. The Pavlovian response
is firmer prices for stock futures, oil, and gold. If there is a deal, and details follow, stocks could benefit further. If the deal
disappears, stocks could suffer.

Spots Linger But Weaken – Our ham radio pal passed along the latest sunspot readings. The recent flurry of sunspots continue but appeared to weaken a bit. The numbers for February 18th through the 24th were: 17, 23, 19, 17, 14, 31 and
40. If the sunspots continue through month-end (which looks likely), it will be the first time in 37 months that we saw a
month with at least one sunspot every day.

While we have had some sunspot numbers every day, the activity level is slowing somewhat. The average of the seven numbers noted above is 23. The average of the preceding week was 38.7. For the week before that the average was 43.3. So, we can see that the sunspots have returned but activity is not exactly growing. Hang on to that sweater – and to that snow shovel.

Consensus – The optimism on the rescue plan may help the bulls. There are a couple of potentially emerging chart patterns, that, if they develop this week, may tell us much about the next big move. Meanwhile, stay very nimble.

Trivia Corner

Answer - Ronnie came back with a rope 2 feet 9 inches instead of the 9 feet 2 inches he was sent for.
Today's Question - There are silent P's (pneumonia, etc.) and silent K's (know, etc.). But do you know a common word
with a silent "CH". We can think of one in five letters. Can you guess it?

Market Commentary By Art Cashin March 1, 2010
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