Art Cashin: Correction Will Be Clear by Next Friday

Investors are bombarded by opinions, predictions, and advice from all sorts of "talking heads," "pundits," and "experts." Investors must then go through a filtering process to determine which voices are worthy of attention and which should be routinely dismissed. I have my own favorites that I think trustworthy, and some time I will share my whole list.

One voice that I heed whenever he speaks is Art Cashin of UBS, director of floor operations at the NYSE. Art has been in this business a long time, approaching 40 years, and I see him as an unbiased observer who can be trusted. That doesn't mean Art is always right, but I think he gives sound advice and is an independent voice.

Art said this morning on CNBC that he thinks the next few days will tell us a lot about the market. He thinks we are currently on thin ice, and the earnings that start coming in today, along with the accompanying outlook for the next quarter or so, will tell us if we are to have a mild correction or a more profound pullback to perhaps the 800 level on the S&P.

Art thinks the size of a possible correction will be fairly clear by Friday, July 17th. One thing about Art is he calls his shot, and he doesn't hedge in opaque language.

To me, Art's outlook makes a lot of sense, since this is a very crucial earnings season. My take away from his comments is to just be patient for a few days; let the picture clear a little, and within the next two weeks, I may be putting on some trades or hiding in a cave for a while.

Art also made reference this morning to a 18-year cycle, which is usually divided into a good half and a bad half. He pointed out that we had such a cycle from 1982 to 2000, and we have finished the first half, the good half, of the next cycle. That is not real encouraging about the next nine years, but the market can have good rallies in such an environment.

So, I am going to closely watch the next few days. I agree with Art that the direction of the market should be clearer as earnings season unfolds, and there is a better chance for profitable trades coming than can be seen right now.

Priorities first, then successful investing.

No positions.

Comments

[igggy:]

My intuition says revenue estimates will be missed but earnings estimates will be beat. That wouldn't be a good sign. You can only cut costs so much.

Jul 07 11:55 AM

[john redmond:]

I watch CNBC with the volume set on mute and only turn up the sound when Art Cashin and Rick Santelli speak, the rest of the time I send that endless stream of jibber jabber to the audio drain pipe.

Jul 07 12:11 PM

[genso:]

John Redmond.....

Same here. Art and Rick are the only two that don't seem to have an agenda. On the other hand, I can't even watch with the sound muted when the Pim(p)co crowd is on.

Jul 07 12:23 PM

[herbert hoover:]

Maybe someday the idiots will see clearly and get rid of Cramer and give his time slot to Uncle Art.

Jul 07 12:28 PM

[squark62:]

author: ... and there is a better chance for profitable trades coming than can be seen right now.

me: i take it this means you ultimately believe markets are headed down if there will be better long buys later. well, i agree with your assessment and if art said what you said he said, i agree with him as well.

i'm not sure what art's premise is for his belief other than earnings are going to be disappointing to the masses. for technical reasons i believe the markets are headed down because essentially call/put ratios are over levered to the upside historically. this will have to be unwound before we get to another meaningful bottom, particularly for the s&p 500.

Jul 07 12:51 PM

[yellowhoard:]

We're completing a very symetrical head and shoulder formation.

I bought out of the money Oct, call options on SRS and EEV when we failed to take out the right shoulder.

It's my insurance policy against bad earnings and governance.

Jul 07 01:10 PM

[optionsgirl:]

I took a small position in qid and eev calls, looking to add some puts on the banks, directly.

Jul 07 02:20 PM

[John Galt:]

The market has been bombarded with nothing but talk of "green shoots". We'll, now we are at earnings season again. Were there really green shoots or not? Are we going to get good news and good GUIDANCE or was March 9th to Present a fantasy?

We shall see.

Jul 07 05:00 PM

[I need more...:]

If I may ask, why your preference in Oct. calls, as opposed to the ETF itself ( referring to SRS specifically)? I hold SRS presently myself.


On Jul 07 01:10 PM yellowhoard wrote:

> We're completing a very symetrical head and shoulder formation.<br/>
>
> I bought out of the money Oct, call options on SRS and EEV when we
> failed to take out the right shoulder.
>
> It's my insurance policy against bad earnings and governance.

Jul 07 05:34 PM

[yellowhoard:]

Leverage.

A few thousand invested in out of the money calls will provide a huge umbrella if the market goes back to new lows.

It's like term life insurance.

Jul 07 05:54 PM

[I need more...:]

Thanks kind sir.


On Jul 07 05:54 PM yellowhoard wrote:

> Leverage.
>
> A few thousand invested in out of the money calls will provide a
> huge umbrella if the market goes back to new lows.
>
> It's like term life insurance.
>
>

Jul 07 06:56 PM

[Mono:]

larry et al

i agree that art is a non biased straight shooter. whether he is correct isn't of much importance to me. rick and art at least speak the truth that they see. they won't sugar coat. if they are right or wrong isn't the importance anymore in my opinion. unfortunately we are now at a point where truth is more important than right an wrong these days. i think it is a sad state to put so much importance on something which seems to be common sense.

as a small note: worked in finance at UBS. arts pieces were insightful, witty, and eloquent. he is a true writer and a sharp mind. i give him his credit. he is not US egocentric to boot.

Jul 07 07:59 PM

[yellowhoard:]

Haha.

I just read your whole name.

Next to the "You say tomato, I say tomato" skit, the "More Cowbell" skit is my favorite Christopher Walken bit.

Have a good one Cowbell.

Jul 07 08:00 PM

[Roger Knights:]

I also have SRS calls (and WFC puts). My bullish bet is on Rambus (RMBS).

Jul 07 09:20 PM

[Duude:]

Art is just showing respect for history. July 17th has a place in history like no other. This is a big day for reversals. Check into history, its amazing.

Jul 08 09:02 AM

[TCK:]

I also like Art .

However, he too seems to lapse into jargon at times. Such as;

( my paraphrasing )

"If the market goes up, it will continue to go up. If support doesn't hold, it will go right through".

Quite amusing at times, even if not informative .

Jul 08 12:20 PM

[Old Trader:]

The early returns seem to show we're back to the "better than expected" foolishness of last quarter, as Alcoa announced after-hours...yet another big loss, but "not as bad as expected", causing it go up 3-4% in late trading.

Then there's California Pizza Kitchens, that hit the numbers on declining revenue, but reaffirmed their full year projections because they've "gotten a handle on their costs".

Methinks the juggler is getting a wee bit tired, keeping all of those plates spinning.....

Jul 08 08:32 PM

[optionsgirl:]

OT- While Cashin thinks he'll sense a direction by Friday ( hat's off to him!) I think you are right, that if revenues are down in this quarter's reporting, and costs have been cut (maybe to the bone?) that's not very promising. At some point, "it could have been worse" doesn't seem like a reason for the market to rally. This is crazy, but maybe we are seeing the market fall because GS's secret program trading was compromised-


On Jul 08 08:32 PM Old Trader wrote:

> The early returns seem to show we're back to the "better than expected"
> foolishness of last quarter, as Alcoa announced after-hours...yet
> another big loss, but "not as bad as expected", causing it go up
> 3-4% in late trading.
>
> Then there's California Pizza Kitchens, that hit the numbers on declining
> revenue, but reaffirmed their full year projections because they've
> "gotten a handle on their costs".
>
> Methinks the juggler is getting a wee bit tired, keeping all of those
> plates spinning.....

Jul 08 09:07 PM

[Mistrofan:]

Agreed - more and more amnd to a larger extent thisperiod of the current crisis looks like the end of 2001 whem everyone was talking about less bad then expected. Is just a pitty that everyone tries to buy time and do not want to recognize the losses on their balance sheets (from banks to companies and individuals). The hope for easy money - let's call ot greed because this is what it is - put lots of people around the world in denial. Denial of reality is BEFORE capitulation. Wel - it seems that we still have to wait a bit more to see the bottom of this equities and real estate markets. How much - well, it might even take a year if people will persist in denial (as was the case in 2002...)


On Jul 08 08:32 PM Old Trader wrote:

> The early returns seem to show we're back to the "better than expected"
> foolishness of last quarter, as Alcoa announced after-hours...yet
> another big loss, but "not as bad as expected", causing it go up
> 3-4% in late trading.
>
> Then there's California Pizza Kitchens, that hit the numbers on declining
> revenue, but reaffirmed their full year projections because they've
> "gotten a handle on their costs".
>
> Methinks the juggler is getting a wee bit tired, keeping all of those
> plates spinning.....

Jul 08 11:45 PM

[optionsgirl:]

Today is Friday. I wonder what Art Cashin is thinking.

Jul 10 03:27 PM