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Friday, March 29, 2024

Gartman Is Short Again

Courtesy of ZeroHedge. View original post here.

Ahead of yesterday plunge in the market, which saw the Dow Jones close at sessions lows, down 300 points with the S&P wiping out Monday’s rally, Gartman appeared to have given algos the all clear to short when as we reported having covered his “market short” just one two days earlier, Gartman was now “modestly net long of equity on balance.”

This was clearly a warning for the bulls, and a greenlight for the bears: after all, the only thing that matters in this market is the “world-renowned commodity guru” Dennis Gartman.

Well, fast forward just a few hours, when we have not only more bad news for the bears (and conversely, great news for bulls), but also an explanation why stocks are set to open well in the green: Gartman is back to a “severely net short position.”  No really.

From the latest Gartman letter:

Clearly we have wanted to be bearish of equities for the past several weeks, having sold the global equity market short two weeks ago on the first rally from the low. We were wrong; the market, globally, moved against us, although it did so on waning, not rising volume. We were short because we were convinced that the economic strength in global terms… and especially in terms of the US market… was running into one very real problem: the fuel that had been  supplied to equities in the form of reserves created by the monetary authorities was being reduced even at the time when the demand for plant/equipment and labor was high and rising. Historically, the great bear markets always begin in the weeks and perhaps months before the economies in question turn from good to ill, for stock market are anticipatory in nature, rising before economies turn up and falling before they turn lower. We are at the latter turning point.

Note then how swiftly the volume advanced yesterday, sufficiently to break through the downward sloping trend line drawn across the tops of the volume figures. This was not just happenstance; this was and is fact and attention… very, very serious and bearish attention… must be paid.

Regarding our retirement account, we came into yesterday marginally net long but we were so only by being long of the shares of the largest independent bank in Tidewater, Virginia and by being long of the shares of a business development company and the shares of an energy trust, both of which were bought for their dividends primarily. We began the day long of small position in gold, and we’d hedged those positions with derivatives sufficient, we thought, to have us only very marginally long; however, as the day ended we increased our short derivatives position sufficient in size to have us end marginally net short.

And the punchline:

It is our intention to add to our derivatives position and to reduce our long positions on any… modest… strength in the equity market today, sufficient to take us to a rather more severely net short position. This is the hardest thing one can do in one’s investing/trading life: to have been right; to have been stopped out and to be forced to return to the original position at prices markedly worse, but we’ve really no choice.

Time to buy.

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