For today's dose of pre-market entertainment, we go once again to Dennis Gartman, who clearly perturbed by the violent turnaround in global stocks yesterday appeared on CNBC where the "closely followed market-watcher" said the early week's market gains could continue for the next couple of weeks.
"Historically when that happens, we carry through. So I think you're likely to trade better — maybe not today, particularly — but I bet by Friday we're higher and I bet by next week we're higher again," Gartman told CNBC in London.
"Anybody who's short - and there are a lot of smart people who are in fact heavily short - they have to run for cover, and I think it could get ugly."
Gartman comically added that he reversed his short and turned long on the Euro STOXX 50 following Tuesday's rally, confirming his infamous "retirement fund" is nothing but a momentum chasing pile of virtual cash.
"When the Euro STOXX 50 reversed to the upside, after having opened lower and then gotten higher on the day, I said to myself, 'this is turning better, something's taking place,'" Gartman told CNBC.
"Perhaps it was the agreement that was reached between the EU (European Union) fiscal authorities and Greece… that seemed to me to be the turning point and once you got higher on the day, it's as if the shorts, I being included, had to rush to get long and I actually ended the day long here, which is unusual for me to turn my position that quickly," he said.
As a reminder, this is what the "closely followed market-watcher" said exactly 24 hours ago, which as we comically mused, precipitated the surge in stocks:
In our retirement account here at TGL we have simplified our position taking in the equity market: we have only a position in derivatives on the short side, and although it is not a material position it is one-sided. We’ve cast our long positions aside. We’ve simplified; we’ve gotten smaller; but we are bearishly inclined, and we are intent upon adding to those bearishly inclined positions the very moment in the futures markets that 17,400 is given in the Dow futures; the moment that 2025 is “given” in the S&P futures; the moment that 4290 is “given” in the NASDAQ futures and the moment that 1085 is “given” in the Russell. These will all happen almost simultaneously. Our antennae are up; so too should everyone’s be.
So many givens... so little time. And some more amusement from his latest note:
We begin then by noting firstly that we were obviously uncommonly wrong in being even modestly net short of equities coming into yesterday’s trading session. That became abundantly and swiftly clear to us about one hour after we had sent yesterday’s TGL to our clients around the world as the EUR STOXX 50 and the DAX indices both had opened lower; turned higher on the day and were taking out the previous day’s highs in what seemed to be only a matter of a very few moments... Indeed, we cannot recall having seen a more violent or emphatic “reversal” in European shares ever.
We have learned over the years to pay attention to “reversal” such as this one circled here this morning, and any weakness that might develop later today or even later this week is to be bought. This is a big change of opinion on our part, but history mandates that we change accordingly.
As is always… ALWAYS…the case, we pay heed to reversals, whether in the equity markets, the commodity markets, the forex markets and/or the debt markets. When market’s “reverse” we pay heed and more often than not we take action. We’ve learned over the years that when such things occur it is better to “shoot first and ask questions later.”
We did exactly that as we moved quickly to get from net short in our retirement funds to net long and by mid-day here in North American we had gotten that way. We covered in half of our short position in derivatives and we began buying both high tech and low tech companies’ shares as we were able, ending the day net long of equities…and rather aggressively so. We cannot recall having turned this radically and this swiftly in the equity market in many, many years, but the “reversal” in Europe forced our hand. We truly had no choice.
What caused the rush higher? If we must point to one fundamental reason for the rush upward it was that the European Union fiscal authorities, led by Mr. Dijsselbloem, the current President of the EU, along with Mr. Schäuble, the usually taciturn Finance Minister of Germany, and Mr. Gramegna, Luxembourg’s Finance Minister, had agreed with the IMF and with Greece that the latter had succeeded in its fiscal reforms and that the Fund and the Troika would help Greece meet her debt problems. They had agreed that the left-of-centre Greek government led by Mr. Tsipras had actually met its commitments on a promised austere budget and that it was meet and right for the Fund and the Troika to release €10.3 billion in financial aid. Mr. Dijsselbloem actually referred to the agreement reached between the various parties as a “Breakthrough,” and indeed it was. From that point on, stock prices were bid up; shorts ran for cover and the skies had cleared.
In our account here, we quite literally were grasping for almost anything we could to reverse our position. Covering… or actually greatly reducing… our short position in the derivatives market was the first course of action. Then we chose to buy high-tech, high beta equities to “catch up” as quickly as we could, and by the day’s end were back buying prosaic, old-guard, dividend payers… but we did indeed end the day net long. Now we shall see if the “reversals” hold; we shall see if stock prices continue higher; we have bet that they shall.
Surely, Gartman's remains the best comedy newsletter money can buy. As for the market, and Gartman's bet that "by Friday we're higher and I bet by next week we're higher again", trade accordingly.