Riding the so-called Trump trade to new all-time highs, the Dow Jones Industrial Average is just barely short of the 20,000 milestone. Stocks have been backing off from their highs, however, and the Dow is now roughly 200 points away from the elusive 20,000 mark.
In fact, for a while on Thursday the Dow went negative for the year, dipping below its 2017 opening price of 19,762.
According to trading legend Art Cashin, the director of floor operations at UBS, the fade over the past few weeks portends a rocky near-term future for the market.
|A trader at the Chicago Board Options Exchange. Scott Olson/Getty Images|
Cashin said a dip into negative territory after gaining to start the year was a "rather frequent pattern but it can be bothersome" and cited a note from Jason Goepfert at SentimenTrader about what it usually means for the market. From Goepfert via Cahsin's note:
"The Dow is negative year-to-date. The drop on Thursday marked the first time in 2017 that the venerable Dow Jones Industrial Average was negative for the year. Going back to 1900, there were a handful of times that the index last 2-3 weeks into a new year before turning negative YTD, and it tended to lead to even more weakness as nervous traders sold."
Thus, it appears to Cashin that the 20,000 level and further gains for the stock market may be out of reach in the near term.
"Historically, it was not a warning of calamity but more a harbinger of weeks, or even months of struggling," Cashin wrote.
Of note, the market started off 2016 by tanking and causing concerns of a recession or economic calamity. While the selling did start in earnest just before the new year, the weakness subsided and the indexes staged one of the greatest comebacks in market history to finish the first quarter in the green.
"Verbum Sat Sapiente," Cashin concluded, which is Latin for (roughly) "Word to the Wise."