Gartman: "The Nasdaq One Day Will Collapse... But Buying Today On Weakness Should Be Wise"

As "expert" opinions on Friday's tech meltdown pile on, here is perhaps the most actionable: that of "world renowned commodities guru" Dennis Gartman.

THE NASDAQ’S ONE DAY COLLAPSE: Will The Trend Line Hold?:

 

Friday’s low was right along this trend line… which if we had space, could be extended well back into ’16. If this is still a bull market… and until proven otherwise it is… then buying the NASDAQ on weakness today should be wise and we shall.

 

 

 

Turning to the so-called FANG stocks… Facebook; Apple, Netflix and Google…and including the likes of NVidia and Microsoft… all collapsed on Friday if by collapse we mean breaks of > 2.0% and which in some instances was > 3.0% and which had traced out massive daily and even weekly reversals to the downside as new all-time highs were made early in the trading session followed by movements well below  the previous day’s lows. Google did in fact trace out a weekly reversal to the downside in perfect textbook fashion; so too Facebook and so also Netflix. Apple failed to trace out a text-book weekly reversal, but only because it did not make a new all-time high last week, having made its all-time high earlier in May. NVidia, one of the highest of the high flying stocks, did not trace out a weekly reversal to the downside, but did, however, trace out a textbook daily reversal.

 

Further, all of these reversals came on massive volumes. For example, NVidia, which has tended to trade 35-50 million shares daily traded over 100 million on Friday. Netflix, which has tended to trade 5-7 million shares/day, on Friday traded 10.3 million shares. Facebook, which has tended to average 15-20 million shares, on Friday traded 35.6 million and Apple, which has tended to trade 25 million shares/day on Friday traded 64.8 million.

 

We have included the chart of the NASDAQ at the lower left of p.1 this morning, noting that the lows on Friday amidst sheer panic selling in the early afternoon took the Index to a trend line that we extend back to the lows of last July, although we show it only into the lows of mid-April of this year. It shall take courage on our part to believe that the bull market is still intact, but in fact it is. Thus, if the NASDAQ were to fall back toward 5675 or so today we shall have to be a buyer, for as Old Turkey would remind us, “After all, this is a bull market.” Further, a drop to 5675 shall only be a 3.8% correction from the peak.

 

Finally, if the NASDAQ does test those lows, our urge shall be to own banking shares above all else for the banks did amazingly well on Friday, rising smartly even as the FANGSs were collapsing, predicated upon the Fed moving to tighten monetary policy at its meeting this week and thus widening net-interest income for the banks… the real driver of bank earnings. Regional banks, especially, may be best served, with the ETF soaring 3.1% on Friday and breaking out to the upside. Any periods of weakness this week are to be bought.

Comments

VD CPL Mon, 06/12/2017 - 09:53 Permalink

so what's Gartman's BTFD entry point again? oh wait, he doesn't even trade... but he's like clockwork and catalyst -- today may just mark the start of the biggest bubble crash in history of "markets" as Gartman furiously yet cautiously yet pleasantly keeps catching falling daggers, virtually that is.

In reply to by CPL

jcaz open calender Mon, 06/12/2017 - 10:38 Permalink

Sweet.   Bot puts Fri and today across the board, and this is all I need to assure that I make money.Thanks again, Dennis- seriously- you've made me and my clients a lot of money with your calls-  you've been the greatest contrarian indicator I've seen in 31 years in the business-  there isn't even a close second......

In reply to by open calender

GUS100CORRINA pitchforksanonymous Mon, 06/12/2017 - 08:17 Permalink

Gartman: "The Nasdaq One Day Will Collapse... But Buying Today On Weakness Should Be Wise"My response: ROFL!!!!! Let's examine some facts:FACT #1: APPLE Earnings have been flat since 2014.FACT #2: Margin Debt is at a new all time high!FACT #3: HUGE P/E Margin Expansion for NO GOOD REASONFACT #4: CBs like SNB are buy TECH STOCKS like APPLE with FIAT Currency.FACT #5: AMAZON Market Cap vs Walmart is a JOKE!!!! (See Comparison below)WALMART Index DJIA S&P500 P/E 17.2Market Cap 226.55B Forward P/E 16.6Income 13.64B PEG 3.42Sales 485.87B P/S 0.47Book/sh 25.47 P/B 2.96Cash/sh 2.2 P/C 34.31Dividend 2.04 P/FCF 15.42Dividend % 2.70% Quick Ratio 0.2Employees 2300000 Current Ratio 0.9Optionable Yes Debt/Eq 0.59Shortable Yes LT Debt/Eq 0.54Recom 2.7 SMA20 3.08% AMAZON Index S&P 500 P/E 187.5Market Cap 437.54B Forward P/E 73.87Income 2.37B PEG 6.48Sales 135.99B P/S 3.22Book/sh 40.43 P/B 22.72Cash/sh 54.53 P/C 16.84Dividend - P/FCF 45.08Dividend % - Quick Ratio 0.8Employees 341400 Current Ratio 1Optionable Yes Debt/Eq 0.61Shortable Yes LT Debt/Eq 0.4Recom 1.8 SMA20 2.28%  

In reply to by pitchforksanonymous

gatorengineer VD Mon, 06/12/2017 - 09:43 Permalink

Wally isnt example a shining example of free market, where would they be without EBT / SNAP?AMZN is playing the waiting game, until big box retail is completely dead.... then they jack up the prices....The other thing is if AMZN were real what would fed ex and USPS numbers be doing?

In reply to by VD

chubbar Mon, 06/12/2017 - 08:14 Permalink

I'm sure the banks will do brilliantly with an interest rate increase by the FED. Just ignore all the NPLs that start showing up on their doorstep as the economy goes from a stall to falling out of the sky.

Let it Go Mon, 06/12/2017 - 08:15 Permalink

Toss a coin when it comes to Gartman's advice. Time has a way of revealing certain realities but does so at its own choosing. The economy is far from a well-oiled and designed machine and in the end, we may find that it is not really completely under the control of those who have been placed in the driver's seat.In a world where central banks have become so deeply involved in manipulating and distorting markets we find true price discovery no longer exist. The question remains how best to prepare for a economic meltdown. Expect both luck and caution to play a big role on our individual fortunes as we move through the financially violent period before us. More on this subject below. http://brucewilds.blogspot.com/2017/05/catalyst-of-our-economic-demise-yet-to.html

DavidFL Mon, 06/12/2017 - 08:24 Permalink

Perhaps Mr. Gartman should take a look at the futures before he makes a buy recommendation. Incredible how these guys stay employed, even more astonishing is why anyone listens!

zvzzt DavidFL Mon, 06/12/2017 - 09:55 Permalink

true story: had lots of discussions with my former employers (two major banks) about such 'experts'. At the end (took some months), the department head said: 'look, we don't care if they are right or wrong or if clients lose money, as long as clients trade on the advice they give. The advisers are just another marketing tool".  

In reply to by DavidFL

dark fiber Mon, 06/12/2017 - 09:41 Permalink

I stopped reading after commodities guru something.  This guy has consistently maintained a 180 degree phase lag between his positions and the oil market.

issimo Mon, 06/12/2017 - 08:35 Permalink

What kind of strategy says "...stay ready to buy now, but beware because there will be a total collapse soon!"  Once you have bought, do you sell once you are up 1% because disaster is right around the corner?  What do we even call a strategy like this...Investor's Russian Roulette...The Bungee Buy and Sell Blueprint for Stress...Gartman's Glorious Gambit?  If really thinks this market is done, why is he giving advice like this?

Hongcha mily Mon, 06/12/2017 - 09:05 Permalink

Yes.  I bought too much SQQQ on May 24 and watched my account bleed for 15 straight days until Friday.  Set a sell stop at 32 Friday afternoon and it filled this a.m. for a 1% net gain while I was making cornflakes.  At the nadr Friday pre-market I had been down ten times as much and the trade was spraying vomit.  The pain is over.

In reply to by mily