Five days ago, on November 16, upon reading the latest Gartman letter, we issued our usual warning: "For the bears out there the wisest thing to do may be to just step away for a bit, and certainly until Gartman's already underwater position, is stopped out." The reason: in the same letter, "world-renowned commodity guru" said that in keeping with his call that a "bear market is upon us"...
As we said here yesterday, we are certain that we are at a turning point where economic activity is strong and shall likely grow stronger for several months into the future but where stock prices are weaker. Again as we said yesterday, it has always been thus and it shall always be thus. The equity market, by its very definition, anticipates changes in the economy, rising before the economy rises and falling before the economy falls. We are at the latter tipping point.
... he announced he was shorting the market, one unit thereof to be precise:
Short of One Unit of the US Equity Market: Yesterday… Wednesday, November 15th…we suggested that on any intra-day strength in the indices here in the US … and by strength we meant 8-12 “point” rallies in the S&P we intended to “sell” the markets short, leaving the actual manner of being short to everyone’s individual preference. Given that the S&P was 2568 as we wrote, a rally toward what had been support at 2572 would be a reasonable place to sell. It got there… barely… and we are now short a marginal sum.
This prompted our suggestion that bears pack it up and return when Gartman throws in the towel again.
Well, that just happened, because - miraculously - what last Wednesday was to Dennis Gartman a clear bear market, has once again mutated into a just as obvious bull market.
STOCKS, GLOBALLY, ARE A GOOD DEAL STRONGER as all nine of the markets that have been open over the course of the past twenty four hours [Ed. Note: Brazil’s markets were closed for the Zumbi dos Palmares Day celebration.] have risen in yet another rather rare “universality” event, led higher by stunning strength in Chinese stocks as the Shanghai stock index has rallied just a bit more than 1% and as Hong Kong’s markets have rallied 1.4%. There was no… nor is there… any economic news specific to China to account for the strength in the Asian markets other than the news out of Europe and the US noted above indicating that the global economy is going well and is likely to continue to do so. In the end, we are simply to reiterate the wisdom of “Old Turkey” from Edwin Lefebvre’s “Reminiscences of a Stock Operator” where the elder gentleman tells his young trading compatriot when queried about the direction of the market that, “Well, after all, this is a bull market.”
And, more importantly, Gartman has - as predicted - closed out his short:
We are short of a small, token position in US equities and we are wrong by less than 1% at this point. Given the normal historical, but very strong, preference for equities to rally into the Thanksgiving Day holiday here in the US and given “Old Turkey’s” wise tutelage, it is best that we cover our position as soon as possible and with that very small loss taken hove to the sidelines to watch and wait.
Translation: dear bears, the water is once again warm.