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Gartman: “We Fear That The “Music” Has Stopped”

Courtesy of ZeroHedge. View original post here.

It was exactly two weeks ago that Dennis Gartman urged readers of his newsletter to "prepare for a breakout in the Dow above 30,000." Why? Because "the past 6 ½ months has been nothing more than a massive consolidation phase in what is still a bull market, consolidating the gains earned over the course of the bullish run that began in early ’16 when the Dow traded down to 15,700." As a result "huge gains, perhaps sufficient to carry the Dow to 30,000+… as exaggerated and as stunning as that may sound… is technically possible."

Well, no more. As he writes in his latest note, today "has the “opportunity,” if we can call it that, to become a very, very ugly day in the global capital markets with the dollar trading higher and thus putting pressure upon foreign shares right from the start."

He explains:

US stock index futures are trading slightly for the worse as we write, with “earnings” still at the fore and with most of the earning’s surprised coming to the upside rather than to the down. But even these vaunted earnings shall take a very second seat to what is happening and what has just happened in China; US shares cannot and will not withstand the broadside hits from China today.

Furthermore, what two weeks ago was consolidation to push the market to 30,000 is now a game of musical chairs that is ending:

So, we fear that the great game of investment “musical chairs” may be ending; we fear that the “music” has stopped and we fear that everyone shall be dashing for that last available seat with injuries along the way. The “reversals” to the downside we had noted last week are still extant; the “gaps” to the downside in the US markets former leaders such as Twitter, Facebook, Netflix, Tesla et al are open and ominous. Protection of capital is now the first order of the day.

And what was until mid July a floor, is now resistance:

We hope… we sincerely hope… that we are wrong about the serious effects upon European and North American stocks that are to be derived from what has happened in China today and that they can be avoided. We hope… we do indeed very sincerely hope… that the virtual collapses in China can be insulated, isolated and over-come, but we very seriously doubt that to be so. A movement below 2,775 in the S&P futures shall be a serious breach of technical support; a movement below 25,000 in the Dow futures would be the same and so too a movement below 7200 in the NASDAQ futures. Keep those levels very, very much in mind; the future of the markets depends upon those levels holding.

Of course, the above may explain this headline:

  • NASDAQ 100 ERASES 0.7% DROP; S&P 500 PARES DECLINE TO 0.2%

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