The markets started the month with a selloff led by financial issues as investors worried that the summer rally could be facing a correction. Should you worry about further declines?
Art Cashin, director of floor operations at UBS Financial Services, offered CNBC his stock-market insights.
“Rumors began to spread that there might be a major shoe to fall in the U.S. banking financial crisis,” said Cashin.
“Even though there was never any substance brought out to the rumor—no real name, place, details at all—the markets never got a breather and that’s highly unusual. Usually, when you get a rumor-driven sell-off, and it’s not confirmed, you get a bounceback.”
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The market is oversold on a short-term basis, but overbought in the intermediate, longer-term basis, said Cashin.
“So you would have thought you had a chance for a reflex rally, and that may still come,” he said. “But I think yesterday, the fact that we closed on the bottom with that kind of rumor indicates to me the high level of nervousness in the market and the lack of commitment to many of these buyers.”
“The fact that people are buying these cheap stocks and some stocks that are said to be worthless, they’re buying them like lottery tickets—this is more gambling than investing and therefore it doesn’t have a very strong backdrop,” he added.
No immediate information was available for Cashin or his firm.
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