Forget China, Volkswagen, Glencore, Noble, and pretty much everything else. The only catalyst that matters for today's price action has just been revealed. Earlier today, Dennis Gartman, whose flop-flip-flop-flipping calls on stocks, commodities and everything else have become a blur, just went mega bearish, and is predicting that the S&P has some 400 points of imminent downside.
THE S&P: How Ominous Is This Chart? There are still many who deny that this is a bear market, but it is that and we fear that it has a good distance to the downside yet to travel. Merely to get to “The Box” shall take the S&P to 1420-1550! Rallies are to be sold; weakness is not to be bought.
And even as Gartman predicts an equity bear market, what else does he "recommend"? Why going long oil "of course."
NEW RECOMMENDATION: Perhaps we are very wrong, but with the contango in WTI narrowing even as prices weaken we think the crude has made its low and we wish to be a buyer… of November WTI this morning $44.63. We wish to risk no more than 2% on the position on a closing basis, or to $43.75.
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CRUDE OIL PRICES ARE WEAKER OF COURSE as the trading world is in liquidation mode but we cannot and we will not be bearish of crude when the term structures move bullishly even as the price of a barrel of crude weakens. Since last Wednesday morning when crude oil prices were effectively $2/barrel higher than they are today, the averaged front month contango has held absolutely steady at $6.07. Under normal circumstance, a $2/barrel break in prices would send the contango out, and out rather sharply. More interesting is that prompt delivery WTI has actually gone to a small backwardation and we’ve not see that in quite some while. Further, since Friday, with WTI and Brent down perhaps 75/barrel weaker, the contango has narrowed by 37. This we find very, very interesting.
As usual, this remains the best contrarian comedy a monthly newsletter subscription can buy.
