In the last market comment we shared from Dennis Gartman, we observed that the “world-renowned commodity guru” said that “you’d have to hold a gun to my head to be an aggressive buyer. I’m quietly, modestly net short and I feel reasonably comfortable being that way.”
“I find it very difficult to be anything other than modestly bearish. I trade only from my own account and I am modestly short of equities generally and I think that’s the proper place to be. It’s a little scary to be bullish at these prices when it’s the Fed and monetary authorities who are sponsoring share prices (going) higher – it can’t last for very long.”
To this, our response was simple: “Expect another ramp higher with new all time highs to follow.”
Sure enough, after tagging all time highs on Friday, the S&P is about to open at never before seen levels.
So does this mean that Gartman has thrown in the towel and is once again bullish? You bet. Here is his latest rant:
SHARE PRICES HAVE SOARED since Friday’ morning with all ten of the markets comprising our International Index having risen and with 7 of the 10 rising by more than 1%, as represented by the “green” coloring in the price index below, and as 2 of those 7 have risen by more than 2% and with 1 of those ten… the market in Japan… having risen by more than 4%. It is a spectacle of bullish enthusiasm and the markets are “dancing” to TINA’s tune… There Is No Alternative. Money has no place to go these days other than to the equity markets and the global markets are breaking out to the upside. It is really quite stunning.
As one or two off the wittier and wiser “Wags” commenting upon how the markets are moving have said, we are witnessing a stunning shift in the fundamental view of how capital is to be allocated: that is, money is moving into equities for the yield and is moving into the bond markets for the capital gains. This is breaking centuries of capital market allocation theory and it is putting that theory upon its head, because for centuries “serious” money went into the bond market for yield and went into the equity markets for capital gains. Now it is wholly and completely otherwise.
Perhaps this is a permanent change in investment theory, but perhaps not. Perhaps capital will, for the coming decades, move into equities in search of dividends and yield, and perhaps the central banks have so disturbed, distended and destroyed the bond market that money seeking capital gains will indeed flow there. After all, what money, in its right mind, would seek to move into Spanish debt yielding dramatically lesser interest rates than US government debt? None, in a truly rational world, with the term “rational” being defined as the action of portfolio managers over the course of the past several hundred years, but in a world over-turned by the monetary authorities at the world’s leading central banks perhaps all of the rules of the past are also over-turned.
As we have argued, just as in the case of physics where the “laws” as understood are either over-turned or severely bent as temperatures approach “absolute zero,” the “laws” of money management are turned on their heads as interest rates approached zero and are certainly turned on their heads as rates have gone into negative territory.
This is a world we are not familiar with, nor could we be. This is a world where all that we understood to be wise and rational is over-turned, while all that we understood to be unwise and irrational becomes otherwise. In the terms of old “Superman” comics, this is “Bizzaro-world” where everything is the opposite of what it was in the real world. We shall have to get used to it, apparently. We, likely, never shall, however.
We here at TGL are up 4.4% for the year-to-date, and moved to cover our derivatives positions on Friday as soon as we could following the release of the Employment Situation Report and the bullish implications for the economy that were to be drawn from that report.
What this means in (paper) trading terms:
As noted here Wednesday, June 29th we had orders in the equity futures markets to sell the S&P at 2045; to sell the EURO STOXX 50 at 2837 and to sell the Nikkei at 15,800…two thirds of a unit for each so that we’ll be short of two units in total now that all are filled. As of this morning, the S&P is 2127 (-4.0% against us); the EUR STOXX 50 was 2,852 (0.5% against us) and the Nikkei future is 15,850 (3.0% in our favor) or an average of -0.3% in our favor. We have had quite enough; we want out now… losing 1.6% on average. Cover these positions immediately… or sooner.
And just like that, another near-term top in the market may have arrived.
The post Gartman Capitulates On Shorts: “We Have Had Quite Enough; We Want Out Now” appeared first on crude-oil.top.