Stocks could be in for very choppy trading on Fridayfollowing the heavy sell-off in the previous session, but get ready for a “massive rally” sometime next week, said Art Cashin, director of floor operations at UBS Financial Services.
“We look like we can be shaping up for a 'Thursday-Monday [scenario]',” Cashin told CNBC.
Based on historical trading patterns, Cashin explained that a "Thursday-Monday scenario" occurs when there’s a huge decline on Thursday, followed by volatile markets the next day and throughout the weekend into the start of the following week.
“Friday tends to be choppy—but it’s not going to be quite as bad as what you saw yesterday,” said Cashin. “And then you go into the weekend with great hopes and what often happens is they open the trapdoor on Monday, which could be if nothing comes out of Europe and you get capitulation selling.”
“It usually ends on Monday, sometimes it spills into Tuesday morning, but from that comes a massive rally, so we’ll look for capitulation as a possibility,” said Cashin.
Cashin suggested looking at Treasury prices as a market indicator for investors who want to re-enter the market. Treasury prices turned lower Friday, as stock prices moved in and out of positive territory, easing the bid for safe-haven U.S. debt.
CNBC Data Pages:
Friday's Top Dow Laggards:
No immediate information was available for Cashin or his firm.