Yesterday morning, several hours before the algos finally read it and sent stocks soaring, Gartman declared that "We Shifted To Modestly Net Short, We Have Had No Choice [3]." Stocks then closed green after a furious last hour rally. But can Gartman make it two for two: as of this moment futures are rebounding again, having spiked nearly 30 points from overnight lows. Perhaps this is the catalyst.
SHARE PRICES CONTINUE THEIR COLLECTIVE COLLAPSE as nine of the ten markets comprising our International index have fallen over the course of the past twenty four hours, and of those nine four have fallen by more than 1% and one… Japan’s market, which because it was closed yesterday had some very serious “catching-up” to accomplish; and did!...has fallen by more than 2%. For the year-to-date, our International Index is now down a very material 748 “points or 7.8%, led downward by the stunning 14.4% decline in the Shanghai Composite. From the highs made late last May… the point at which we now believe that the bear market began, for by definition a bear market begins at the very peak of the previous bull market…our International Index is down a very real and very material 2378 “points or 21.3%. Even the most doctrinaire” definers of bullish or bearish movements shall consider a 21.3% decline to be material in nature and certainly now defined as a bear market.
Because this is a bear market, strength is to be sold into and we had hoped that yesterday’s early strength in the US equity futures would be of a sufficient nature that would allow us the opportunity to sell. It never came. However that does not preclude us from trying to ascertain to which level the inevitable rebound shall carry prices, but as the chart at the bottom left of p1 this morning suggests we can readily imagine the S&P futures making their way higher with sufficient strength to carry the futures upward toward the 1975-1990 level. We can… and we will be… patient.
The punchline:
THE S&P WILL BOUNCE…: It Just Has To: And when it does we’ll be prepared to sell the S&P futures short. Our target is the “red zone” note here, which was support back in October, and November and again in December, but which shall not be rather clear resistance.
Shorters may want to take today off.
