On one hand the Chair of the Federal Reserve now says that the entire market is overvalued (not just biotechs), but on the other, that perpetual real-time heatmapper and uber contrarian signal Dennis Gartman, says "stocks are in for a bit of trouble." Will Yellen Capital Management LP be right, or will Gartman's uncanny ability to be always wrong at just the right time, provide the bounce the market so desperately needs?
From Gartman:
This trend line is so well developed and so long in duration that it shall be like Siren’s Songs and attract share prices to it to put the market to test. Discretion in the far better part of investing/trading valor then.
[5]
Look then at the chart at the lower left of p.1 this morning of the S&P in monthly terms going back into early ’11, when the bull market was already two years old. The trend line drawn across the lows in early ’12 and again last October projects to 1900-1940 compared to the current 2075 level, and a 10% correction from the high projects to 1890 on the S&P. Those shall be our targets to the downside and all the while we shall argue that the bull market is still in effect and that at the most severe we are to be neutral of shares until such time as those targets are high or until such time as there is a clear indication that the correction has run its course and has turned for the better.
In our retirement funds here at TGL we have simplified our positions rather dramatically, taking what we think to be our net market position to neutrality… or as close to neutrality as measured by Beta… as we are able, holding only a position in “tanker” shares, and our positions in gold predicated in EURs and Yen, fully hedged with various derivatives. We intend to remain with those positions until further notice.
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I would highlight that equity market valuations at this point generally are quite high. There are potential dangers here.
