UBS’s Art Cashin is not surprised to see stocks struggling to continue the rally seen earlier in the year. There is a historical weakness in the last half of January, he said on CNBC “Squawk on the Street.” The rally is “new money for a new year,” said Cashin, director of floor operations for UBS Financial Services at the New York Stock Exchange. “Historically, when you get into the second half of January that tends to be committed, there’s a little bit of a gap.” He sees the stock market moving into that trend, with a key test of 3,900 in the S&P 500 on Thursday and a minor test of 33,000 in the Dow Jones Industrial Average. The next key level to watch in the S&P 500 is if it drops to 3,800. If the index breaks that level, they could see further declines and possibly reach 3,500. “If we experience enough weakness to do this, then we will test the very critical area down around 3,200,” he said, adding that the rate drop is a big step and investors should take it quickly. time. A few interesting weeks There are several other things that Cashin will watch in the coming weeks, from the debt ceiling crisis to the relationship between bond yields and equities. They will also look at economic data, which ultimately reads as bad news as bad news and directs traders to punish equities. “If the economy shrinks faster than we thought, the Fed will not be able to act, the Fed will be behind the curve in trying to get that soft landing,” he said. Outside of the US, China has an important few weeks to reopen due to the Lunar New Year holiday. This will be a major test as millions of people travel for the event and could spread Covid and push for the reopening of the country. However, if it goes well and the country continues to reopen, it could increase oil and energy prices and help inflation. They will also be watching the US dollar, which hurt emerging markets last year with its strength. This year, it is likely to be weaker, but it may bounce back earlier, he said.