There had been much speculation in recent days whether the only thing that matters for markets – Dennis Gartman’s short position – which he put on recently near the market lows and may have been largely responsible for the now traditional algo response to fade any reco from Gartman, had been stopped out as Gartman warned he was about to do on several last week occasions.
This morning, just a few days after Gartman’s “retirement” account blew up following his investment in crypto fraud Riot Blockchain, we can confirm that as of this morning it is once again safe to short stocks: Gartman has been officially stopped out. To wit:
STOCKS HAVE GONE GLOBALLY PARABOLIC TO THE UPSIDE and clearly… at least for the moment… we have been wrong in being short of equities, for there comes a time when the action of the market tells us that we have to admit the error of our ways. P/e multiples may be extended; Price/book value ratios may be egregiously extended; margin usage may be egregiously extended; the price of equities relative to commodity prices may be egregiously extended; the public’s participation may be egregiously extended; the fact that volume expands as markets weaken and that volume contracts as markets rally may be egregiously “extended,” but these facts make no difference for prices are higher… prices have been higher… and prices may move higher still. We may have been right on the bond market for several “units” and we might have been right on gold for a unit or two, and we might have been right on the grains, but we shall be measured most publically by our having been wrong regarding equities in global terms over the course of the past two and one half weeks.
What we shall not do at this point is turn suddenly bullish of equities for that would almost certainly only serve to cause us losses yet again. After 40+ years of being involved in the capital markets we’ve learned few lessons that have truly “stuck” with us; adding to losing trades is one lesson we want to learn yet again and “reversing” one’s position too swiftly after being rather publically wrong is another.
Clearly we have been wrong; clearly going to the sidelines is the proper course of action and clearly paying heed to what is going on in other markets where we have been right is the better course of action. We shall do precisely that.
Short one Unit of Global Equities: Wednesday, February 14th we sold US, Japanese and European shares, using our International Index as our “gauge” with the Index at 11,896. We sold one unit in total, risking 3% from our initiation point on the trade… or to 12,253… and we are wrong. We have had gold right; we have rather clearly had the bonds right; but of the equities we have clearly been wrong of and since our “stop” has been elected we have no choice but to accept the loss… which is approximately 3.4%…and run to the sidelines upon receipt of this commentary, living to fight another day
Finally, for those wondering what prompted the dramatic squeeze higher in Treasurys on Friday, read on:
We were, until Friday, aggressively short of the US bond market but with the commercial hedgers aggressively long and with the “small traders” rather aggressively short we thought it wise to go to the sidelines, sizeable profits in hand, with the intention of selling the rally in a week or two or three?
You know what to do.