The Dow finished above 10,000 for two straight days, closing above 10,060 on Thursday. However, Art Cashin, director of floor operations at UBS Financial Services, said he still remains skeptical on the markets.
“[Dow] 10,000 was kind of an artificial thing—we were there 10 years ago,” Cashin told CNBC.
“The world has changed [since then] but we’re still stuck around 10,000. Traders down here in the majority still remain somewhat skeptical.”
Cashin said the markets are currently at a couple of resistance points and investors ought to be wary of options expirations and “rather mediocre earnings results” that might take some steam out of the rally.
Cashin said the rally was built on short covering:
“You see the short positions on the NYSE drop precipitously and then the amount of cash on hand at mutual funds crank rapidly—there’s not a lot of that,” he said.
“And it doesn’t seem to be to the benefit to the bulls. It doesn’t seem to be a big rush of sideline money into mutual funds. So there’s skepticism even among the public, for now.”
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Additionally, Cashin said it’s a “negative sign” that stocks have been hitting recent highs on volumes.
It indicates "a top being formed,” he said. “The rally yesterday putting one more new high for the year came with more declines than advances, and declining volume outstripped the advancing volume. Those are the kinds of divergences that you don’t want to see and it doesn’t give you a lot of faith in the rally.”
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Disclosure:
No immediate information was available for Cashin or his firm.
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