While Gartman's immaculate accuracy at suggesting market directionality served everyone well yesterday [6], today the "opposite oracle" is cloudy, which may explain why thus far futures are broadly unchanged. To wit:
SHARE PRICES HAVE FALLEN VERY SHARPLY IN THE PAST 24 HOURS, as eight markets of the ten comprising our International Index have fallen and as five of those eight have fallen by more than 1%. Our Index has lost 107 “points” or 0.9% and had it not been for strength once again in the market in mainland China our Index would have been down by more than 1%.
We begin then by saying without equivocation that we have changed our mind again regarding equities, having chosen in the few hours after sending yesterday’s TGL that as the bond market began to strengthen and as the equity markets in Europe began very seriously to weaken… weakening sufficiently enough yesterday for us to recommend exiting long positions established two weeks ago in the EUR STOXX 50 index for a small but important profit…and as the dollar shifted into very high gear to the upside, that something was changing in the psychology of the equity market that caused us to take action. Hence in our retirement funds here we reduced very slightly our long position in Apple directly and then wrote near-the-money calls against the remaining position. Further, we sold just out-of-the money calls against the “tanker” shares we owned, and we used the money taken in from those calls to buy more derivatives sufficient to take us back to market neutrality. This may have been an error on our part; time only shall tell, but for the moment that appears to have been the wise course of action.
And not even Virtu algos know what the market opposite of neutral is.
