The last time we heard from Dennis Gartman, he has just turned bearish due to a peculiar "catalyst": he had just seen the infamous Barron's "Dow 30,000" cover (with a two day delay) which prompted him to say that "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." Shortly after, the Dow spiked above 20,000 again, and the S&P closed Friday just shy of all time highs.
Fast forward to Monday morning, when the "world-renowned commodity guru" has flip-flopped again, and is no longer bearish, advising his readers he has covered his short.
STOCK PRICES CONTINUE TO MAKE THEIR WAY HIGHER and at this point we see no reason to try to suggest that our modestly bearish position has been right for clearly it has not be; that is, we’ve tended on balance to err quietly bearishly of equities or to err neutrally of the them when it has been proper instead to have erred openly bullishly. This is especially true following Friday’s sharp gains in light of the strong non-farm payrolls number released by the US Department of Labor.
It does not matter, apparently, that so many different fundamental and technical indicators we’ve grown fond of over the years have been and are manifestly bearish of equities, equities wish to go... and likely shall go... higher. P/e multiples may be strained to the upside, but shares are going higher. The CNN Fear & Greed Index may have soared to levels that in the past strongly urged one to be short of equities and from which weakness almost always developed, but it does not matter… shares are going higher. The public may be uncommonly long of equities, pouring money into passive equity funds at rates which in the past gave way to manifestly lower share prices, but again it does not matter… shares continue to go higher.
We have therefore made no “official” recommendations regarding the US equity market in quiet some long while, and it may be quite some long while before we actually do make another recommendation. Nonetheless, we were rather clear on Friday coming into the employment report that we were modesty net short of equities in our retirement fund here at TGL, having had no position in any of the individual equities but having taken a modest net short position via derivatives. Immediately upon seeing the report we ran to cover, “paying up” in the NYSE-pre-market to do so. Having covered that derivatives position we did nothing more. We’d done enough to get to the sidelines, taking our loss and focusing our attention elsewhere where sense seemed more common.
And now the real punchline: "We ended [Friday] +2.7% for the year-to-date. To get the “numbers” out of the way this morning, the S&P ended Friday up 2.6% for the year-to-date while stocks in international terms as evidenced by our International Index are up, as of this morning, 2.7%. We find it rather interesting then that we, in our retirement account, the S&P and our International Index are all up effectively the same."
Others surely find it "interesting" too. That said, today's mini-puke in Europe and US futures may just have gotten its second wind.