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ART CASHIN: If The S&P 500 Falls Below 1925, The Ensuing 'Cascade Effect' Could Compound On The Way Down

Sam RoOct 10, 2014, 18:04 IST

Is this the end of the five-year-old bull market in stocks?

Thursday's 2% plunge in the S&P 500 puts the index 4.5% below its Sept. 19 all-time high of 2,019.

The S&P is currently at 1,928.

Veteran trader Art Cashin warns that we should get worried if the S&P breaks through 1,925.

"We are heading toward a potential retest of the area around 1,925 on the S&P," Cashin said to King World News. "We stopped in that approximate area last Thursday, and again before the most recent bounce yesterday. So if we get down there and we test it and fails, we run the risk of a kind of cascade effect (of selling) at that point."
What does he mean by that "cascade effect"?
"Very logically you would be looking at the area of 1,900 to 1,905 on the S&P," he continued. "And if you break through there, you kind of compound things (to the downside) as you go."
On the flip side, Cashin also notes that if the S&P holds near 1,925, we could experience a "triple-bottom" after which markets would rally again.
For now, futures are in the red.