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Gartman: “Yesterday The ‘Machines’ Came In And The Game Changed”

Courtesy of ZeroHedge. View original post here.

With Gartman's August 11 prediction that "the bull market has come to an end" (which carried the added bonus that Gartman's "reputation" was also on the line, once the "commodity guru" was proven wrong) long forgotten, and in fact both on CNBC and in his latest note to clients, Gartman once again declaring that it is a bull market after all, lately it has become difficult to read Gartman's latest missives and trade recommendations (if only to do the opposite), as recent events appear to have deeply scarred the confidence of the CNBC Fast Money guest, who barely dares to make any forecasts. That said, he does continue to have an uncanny approach to "Gartsplaining" market events, and in this regard his latest note was certainly no exception.

Here is the money excerpt from his latest letter:

STOCKS, IN THE STRANGEST OF WAYS, ARE NEARLY UNCHANGED as measured by our proprietary International Index wherein six of the ten markets comprising our Index have risen… none by more than 1%… and as four have fallen, with Germany’s 1.5% loss leading the way to the downside. In the end, our International Index has gained a marginal 4 “points” but also in the end the fact that the markets collectively were able “accept” the supposed threat from North Korea; were able to shrug off that threat and in the case the markets in North America were able to finish the day higher was certainly most impressive.

Yesterday once again we stated here that this does indeed remain a bull market but that because of the weakness that had been developing over the course of the past several weeks and because the very trend lines in the NASDAQ, the S&P and the Dow Industrials were under attack from above it seemed reasonable and wise to err very much toward neutrality; that is, of the three net positions one can have in a bull market… Very long; modestly long and finally neutral… it seemed wisest to adopt the latter. Indeed, given the geopolitical circumstances prevailing yesterday morning that did indeed seem to be the proper order of the day.

However, by mid-morning, as the “Machines” came in to buy equities here in North America, and as the trend lines in question were apparently holding, the game changed. Support held; shorts found themselves in very real trouble; those under-invested suddenly saw a reason to become more properly invested and the markets here in North America impressively turned for the better, closing higher on the day and “reversing” to the upside in truly impressive fashion.

Note then the chart of the NASDAQ futures the page following, and note the “reversal” to the upside as the previous day’s lows were taken out and as the previous day’s highs were also, with the latter closed sharply above. This we find technically impressive, with the recent month and one half’s trading action now having the appearance of the mid-point consolidation. Further in the bullish case, but from a technical perspective, note once again in the chart at the upper right of p.1 of the CNN Fear & Greed Index that after having made a low more than a week ago under 20… a point at which the market’s “Fear” was high and a point at which contrarian trading philosophies should be triumphantly bullish… it has risen to 28, with the bottom becoming more and more definitively evident.

The situation in Houston has taken one major concern away from those who are bearish: the impending problem regarding the Debt Ceiling. As our great friend, Mr. Doug Kass, has written and which we note in whole clothe below, “Houston” has given the President, the Republican House and the Senate, and the Democrats too, “cover” to vote in favor of the debt ceiling extension. Who, in government, can vote against an extension of the debt ceiling when several million Houstonians and Corpus Christians are  devastated by what hashappened there and shall be looking to Washington for aid and support?

This is a bull market; we are to err bullishly. One needn’t be reckless in so doing and indeed we shall still suggest that “modestly long” is now the order of the day rather than “aggressively long,” but long one must be.

In our retirement account we did nothing yesterday in the end.

And, as an added bonus, here are some even more entertaining political observations on recent events in North Korea:

We begin this morning by stating in terms as certain as we are able regarding North Korea that although Kim Jong-un may appear at times to be utterly irrational, he is not. He is, for lack of a better term, “irrationally rational.” He has no intention of firing an armed missile at or near to US properties or toward US allies for he knows full well that were he to do so it would be his death sentence. His country would be annihilated almost immediately and his death secured.

We must understand that Kim is an Old Guard “Communist” and as such he is atheist. Unlike the Islamic terrorists with visions of paradise to be achieved in the after-life of martyrdom who therefore can and will undertake suicidal terrorist opportunities, Kim only has this life. There is no afterlife. His regime is his paradise; there is nothing more to after this. As such, he is willing to go only “so far” in agitating the other nations of Asia and the US, before standing down.

Well, if the whole "trading" things does not work out, Gartman certainly does have a future as a keen, deeply insightful, observer (and Gartsplainer) of the human condition.


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