It was inevitable.
As we reported first on Friday [8], the best contrarian indicator the market has ever known, perhaps even better than the legendary FX titan, Tom Stolper, Dennis Gartman recommended clients invest their monopoly money alongside his, in a short gold, long crude trade: one which has lost about 5%on both legs in 24 hours. To wit:
CRUDE OIL PRICES ARE LOWER BUT WE ARE CHANGING OUR VIEW ON PRICES for having been overtly and rather relentlessly… and very publically… bearish, we are this morning turning bullish of crude oil and we are turning so because the term structure shifts mandate that we do so.... We do not make this statement lightly for this is a material shift in our view of the energy market… a very material shift.
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Amidst the carnage of the global stock markets this morning and even in light of the sustained bear market in crude oil, the narrowing of the contangos in Brent and WTI brings us to become a buyer of crude as noted at length above. We’ll buy a unit of crude oil, split between Brent and WTI, upon receipt of this commentary. We shall, for the moment, give these prices the latitude to move 3% against us, hoping that we can tighten that up when we return Monday.
Moments ago, the $40 support level for oil finally snapped...
[9]
... and with its so did Gartman's oil stop loss level, which means Gartman is now stopped out.
Normally this would mean going long, however in this case China has yet to open and following the disappointment of no RRR-cut, tonight's commodity carnage may just be beginning.
