On Saturday morning, we noted that in what has become an market-timing tradition, Barron's released its "Next Stop Dow 30,000" issue, which promptly raised red flags among traders that the market may have peaked.
Convictions that the next leg was lower were substantiated on Monday morning, when Dennis Gartman announced he was turning more bullish, saying "Our Propensity Is To Find Modest Long Exposure Today", because - well - stocks were higher... just hours before the biggest market drop of 2017.
So, in the aftermath of yesterday's drubbing, we were wondering if Gartman would flip-flop once again. We got the answer earlier this morning, when indeed the famous momentum chaser did just that. His excuse? Not getting the Barron's edition until late on Monday. No really: here is the "explanation in his latest letter"
We were concerned about the stock market when we opened the latest edition of Barron’s and saw the front page cover announcing DOW 30,000! In the past, it has always been magazine and/or newspaper headlines that marked the highs and lows of the equity markets. Hence, when we opened our mail yesterday morning [Ed. Note: We sometimes don’t receive Barron’s in our post-office box until Monday morning; the rest of the world receives it on Saturday. This was one of those days!] and saw the front cover we thought: Has it happened again? Has a nation-wide publication once again marked the highs? Have we learned nothing at all from history?
The jubilation over Dow 20,000 was disturbing enough, but to have had Dow 30,000 touted on the front page of Barron’s revisited historical precedents that spoke very loudly to us. We would very much like to believe that the bull market shall continue and we would very much like to think that Dow 30,000 shall eventually be upon us, and we very, very much would like to believe that any further weakness in stocks is to be bought, but at the moment we have very serious doubts to that effect…. Very, very serious doubts. Tops of consequence are made in this fashion, with front page articles touting new highs. Attention then must be paid:
And the climax:
In our retirement funds here at TGL we came into yesterday modestly… very, very modestly… long of equities for we were long of the shares of a high-yielding business development company listed on the NYSE that had been bought in order to capture the dividend as the stock went “ex-“ late last week. We’ve brought a stop up behind that position that shall take us out at break-even, including the dividend, but we’ve no intention at this point of buying anything else and if we are taken out we’ll stand wholly aside and watch further developments.
It may be time to cover those shorts.