Market legend Art Cashin says a 'conspiracy theory' is going around that explains the latest stock rally

Look around the economic landscape and it's not hard to find bad news. Brexit fears, another possible quarter of bad earnings, sliding oil prices, record lows for bond yields, and so on.

And yet, the stock market has eclipsed its all-time highs for both the S&P 500 and the Dow Jones indexes.

This dichotomy of news and market moves has gotten some traders frustrated according to Art Cashin, UBS' director of floor operations and trading floor legend.

In his daily commentary Thursday, Cashin entitled a subsection of the report "Conspiracy Theories Grow Among Frustrated Shorts" and said that the recent moves have drawn the ire of some betting that the stock market will go down.

"The breakout to the upside from the 15 month trading range has frustrated various traders, most notably the shorts," said the note. "This week, as the breakout took shape, some folks claimed the move was 'constructed', possibly related to the upcoming expiration."

Cashin then highlighted commentary from Keene Little at Options Investor that fleshed out this "conspiracy theory" even more. The first point that Little makes is that the market has been seeing huge gains in overnight trading, immediately opening higher and then barely moving during the day.

"This is frustrating for traders on both sides since there's been very little to trade during the day," Little suggested. "It's much easier (cheaper) to manipulate the market higher with overnight futures than it is during RTH (regular trading hours)."

Additionally, Little noted that much of the timing and movement of this action appears to have something to do with central banks and Brexit. Here's his breakdown via Cashin (emphasis ours):

"Many are questioning how the stock market could possibly be rallying so strong on what appears to be very weak fundamentals. Since the spike down into the June 27th low (post-Brexit reaction) there's been much speculation that the central banks panicked and injected a lot of liquidity into the markets to prevent a sell-off. After all, this has been their mission for quite some time, now readily admitted by them. They certainly succeeded at their mission (again) with the big spike back up this month."

Essentially, while there have been statements from central banks after the UK's decision to leave the European Union saying something to the effect of "we are ready to support markets," and Little believes central bank infusions are a significant part of what is driving the rally.

To be fair, the central bank infusions were telegraphed before so it's not exactly a conspiracy (That'd be like a thief telling a security guard how they're going to rob a bank the day before they do it) and the overnight trading may be the result of positive reactions to developments in Europe and the UK, the source of much of the worry in markets.

Either way, it appears there is chatter of shady dealings and conspiracies in stocks.