For a second, it seemed that the broad risk-off wave that started in Asia, swept Europe and pressured US futures was here to stay. And then, the signal all algos had been waiting for emerged: Gartman just flip-flopped back to bearish.
From Gartman's latest letter:
STOCK PRICES ARE DOWN AND THEY ARE DOWN SHARPLY…. EVERYWHERE and it is the fact that they are down in all ten of the markets comprising our International Index that has our very real… very keen… very severe interest this morning. Universality of weakness is rare and when it happens it almost always marks major turning points. We can recall the days just after the lows made in the spring of ’09 when after the material weakness of that violent bear market that suddenly all ten markets turned for the better. The low was marked by that universality of strength. We can recall one or two days late in the Dot.com bull run when the markets turned lower, marked by one or perhaps two sessions of sudden universal weakness, marking the top. The top is once again being marked as we write.
Secondly, here in the US, something strange had begun to change in the past week or so as the markets were opening higher and closing lower, or in some instances, were closing hard upon the very lows of the day. Bull markets open lower and close higher; bearish markets open higher and close lower and it was the latter that has had our interest. Yesterday was precisely that sort of trading affair as the market opened for the better and closed hard… very hard… upon the low of the day. The top was being marked.
Thirdly, the stocks that had led the bullish charge in the past year or more… the FANGS primarily, along with the likes of Tesla… were, over the past several weeks, turning lower, or in battle terms, the Generals were being shot, leaving the lesser ranks behind the battle, confused… sullen… and routed.
Finally regarding the European equity markets, is it not interesting how badly they’ve acted even as US equities in the case of the Dow had risen? Note the chart this page and note firstly how far below the highs made very late in October and very early in November we are presently? Secondly, note that as the market broke hard earlier this week the volume of the futures soared, while as the market there has bounced over the course of the past two sessions the volume waned… badly. If volume is supposed to follow the trend, the trend in the past several days has turned badly for the worse.
In our retirement funds here at TGL the only thing we’ve done is to have added a bit to our out-of-the-money put position; we’ve left our long position in steel shares alone and we’ve left our long position in fracking related shares alone also. We did reduce our long position in gold however. This morning, we’ll be buying more puts and we’ll likely be reducing our long positions sufficiently to get our “net” position to one that is slightly net short.
And now, market are back in the green.