Shortly after Garman "warned" last Wednesday that "stocks could be in trouble", we warned traders that anyone who had put on fresh VXX longs may want to cover...
Gartman: "We are long of volatility… or effectively short of the market… via the volatility ETF, VXX"— zerohedge (@zerohedge) August 4, 2016
... noting that alongside Goldman's "sell for three months" call, the S&P is poised for further record highs. Sure enough, as of this moment the broader US equity market has never been higher.
So having been on the wrong side of the market move for yet another time, has Gartman flipflopped once more, as he is wont to do any time price action does not justify his instamomentum-chasing calls? You bet.
From his latest overnight note:
SHARE PRICES HAVE ONCE AGAIN GONE SKYWARD, following the release of the US Employment Situation Report, which obviously surprised almost everyone, everywhere. Although this has rather obviously raised the odds of an increase in the O/n fed funds rate somewhat, it has also suggested very strongly that the US economy is doing quite well and that the US economy shall “drag” the rest of the world along with it. Are stocks over-bought? With the CNN Fear & Greed Index at 86 in egregiously “Greedy” territory, that fact is un-deniable, so of course they are. Is the P/e multiple for the US market in parochial terms and for the global market in catholic terms high? Yes… obviously and rather shockingly so! But can this trend continue to move “from the lower left to the upper right” despite our antipathy toward it? The fact of the matter is, “Yes, it can and seemingly it is and shall.” Fighting this trend has been a mug’s game of the worst sort, making all of us who’ve seemed to be wisely short at the proper time look, in the end once again, to be manifestly foolish.
The trend, despite our antipathy to it, remains upward and we have been undeniably wrong in having taken up a small bearish position via a bet on volatility rising. As is our method of trading, when we are wrong we try our best certainly not to do more of that which is not working and hence we covered part of that position in the VXX last week. We covered more immediately after the news on payrolls was released, and we shall cover more today.
We’ve no choice. We have to dance with TINA… There Is No Alternative…until the music stops even though we do not like the music and we do not like the band.
Finally, Gartman's always enlightening P&L update:
For the year-to-date, stocks around the world as measured by our International Index are up 4.0%, while stocks here in the US as measured by the S&P are up 6.7%. We here at TGL suffered perhaps our worst day of the year on Friday, and although we are still up 5.8% for the year-to-date, where we had pleasantly been out-performing both the International Index and the S&P we are now barely outperforming the former and are under-performing the latter.
While Gartman flipflopping has traditionally been an "all-clear" signal to reload on shorts, Goldman's bearish bias worries us and as such it may be prudent to wait until the taxpayer-backed hedge fund turns bullish again before capitulating on the short side. Then again, perhaps to algos Gartman is more important than Goldman. We will know the answer at the close of trading today.