Even Gartman Is Calling For A Bounce

With the Dow and S&P dangerously close to red for the year, Wall Street's heavy bullish artillery is out today and urging clients and retail investors to BTFD (even as professional investors are busy liquidating into the recent rout as Goldman explained earlier this week).

Case in point: JPM technical strategist Jason Hunter said that the S&P 500 drop on Tuesday to its lowest level in nearly five months could be a sign of an imminent rebound: "The break to new correction lows puts the pieces in place for a bottom. We expect any residual weakness to find buying interest below 2,700." He then elaborates:

“The S&P 500 Index break to a new correction low and test of the 2,674-2,693 support zone triggered bullish momentum divergence signals on the intraday time frames. A move through 2,755-2,768 resistance would confirm a short-term trend reversal and turn our attention to the 2,816-2,826 and 2,865 resistance layers.”

Of course, since all Jason is doing is reading lines on a chart, the weakness may well accelerated. In any case, Hunter still expects a fourth-quarter rally that would push the market to new cycle highs into early 2019.

But while JPM's call may go either way, a more concerning "bottom call" came from none other than Dennis Gartman, who in a note to clients this morning writes that "two weeks ago we suggested that the S&P would find support at 2700 and for now it has. Whether this shall be lasting support is anyone’s guess but for now a bounce back toward 2820‐ 2850 is reasonable."

More from Gartman:

There were many who look to the recent steep sell off as a major new, long term buying opportunity. We do not, and we wish to be quite clear about that. Nonetheless, we do see this as a very short-term buying opportunity and shall not be surprised to see the S&P and the other broad indices bounce… and bounce perhaps rather steeply… from yesterday’s lows. Indeed, in the case of the US market, it has already completed a good deal of that bounce given that the Dow Industrials rallied a very significant 500 points from their low.

Nonetheless, several weeks ago we suggested that support for the S&P could… and likely would… be discovered at or near 2,700 and indeed that support did make itself evident yesterday. This can and should give rise to a bounce that takes the S&P futures perhaps back to the range between 2820-2850, which shall mark “The Box”, or the 50-62% retracement of the recent sharp break.

That said...

We have maintained…and still maintain… the same philosophy that we’d adopted for these past several weeks and months: that this is a bear market and that periods of strength can be and indeed must be used to sell into… to lighten up existing long positions if one is still reasonably long and to sell short if one is of that mind. We stand by that thesis. But for a day or two or three, a bounce is in order.

To this all we can say is that if everyone - and Gartman - is convinced that a 2-3 day bounce is imminent, it's quite clear what that means.