Over the past few days I have found myself feeling compelled to hit the mute button on my TV multiple times. Few things get under my skin during the day more than the commercial with the AFLAC duck singing to newborn children. As the commercial gets more and more airtime, I take stronger vows to avoid ever buying supplemental insurance from them. The incessant coverage of the Facebook IPO also got to be a little bit much for me. While the IPO and all that came with it is rather fascinating, I just wanted to hear something different. Today, I got my wish in the form of commentary from Art Cashin.
The equities started in the green from the get go today, and extended those gains as the session pressed on. Still, Mr. Cashin was cautious. Tops on Cashin's mind was the topic of distribution days. A distribution day is when you see a broader index close lower on the day with higher volume than the previous session. (For a more in depth definition you can visit the following IBD link http://investdaily.custhelp.com/app/answers/detail/a_id/276/~/what-exactly-is-a-distribution-day-in-a-market-index%3F)
He pointed out that every day last week was a distribution day. How many times has the seasoned market vet seen this? Zero. On a less technical note, the same things that Cashin warned about before the selloff, are what have him concerned now. Namely, he is wary of the potential for spiraling bank run in Europe. It is common knowledge that withdrawals have begun to accelerate in both Greece and Spain, but so far they have been contained. If however there is a panic or scare, a bank run could cause chaos that policy makers simply wouldn't have the power and/or speed to stymie.
In the world of gold we had a rather uneventful day. We reached a 1599 handle but were unable to work through resistance at 1600. We also found support at the 1585 level, keeping us rather range-bound on the day (fuller analysis can be viewed at Dan Norcini's blog; http://www.traderdannorcini.blogspot.com/2012/05/gold-continues-its-bounce.html)
July Gold options volatility came in over 2 full vols today. The big data point we'll all be looking to will come next Friday, the 28th, in the form of the employment report. While we will get consumer sentiment this Friday, last reading was the highest its been in years, and that was certainly not a good short term indicator of market direction. As such, absent any unforeseen insanity out of Europe, I imagine we will stay relatively range-bound, and for vol to continue coming in.
-Ben
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