Almost one month ago, when the market was well lower and the VIX was quite a bit higher, we shared some "Bad News For The Bears: Gartman Will Be Long VIX Until The S&P Hits 2,118" which led us to conclude "Gartman has basically doomed the market to soar back to its all time highs. Sorry bears."
We were curious how Gartman is faring during this latest dramatic rout to his bearish stance. Here is what he said in his latest report:
Share Prices Have Exploded Upward and there really isn’t anything more one can say other than that for all ten of the markets comprising our index have risen. That in and of itself is noteworthy, but then to see that six of the ten have risen by more than 1% and that of those six four have risen by more than 2% and that one… the market in Brazil… has risen by more than 3% is stunning to say the very least.
Stocks in global terms are still lower for the year-to-date but clearly that loss has been made demonstrably smaller for at this point our Index is down only 2.0% while the S&P here in the US is up 0.9%.
We are up 7.0% for the year-to-date here in our retirement fund and during the day yesterday we did make one material change in our positions: we bought the largest aluminium producer here in the US following its worse-than-expected earnings and sales figures reported out Monday evening, while we retained our position in gold predicated in EURs and Yen. We also reduced slightly our position in the bond market, cutting that position by approximately 15% as it became obvious during the day that stocks wanted to go higher and that maintaining a modestly net short position via the bond market was likely an investment idea gone bad. Indeed, we covered enough of the bonds and bought enough of the aluminium producer to effectively reduce our net equity exposure as close to zero as we could. When markets speak, we listen and the markets seemed to be speaking bullishly from the outset and especially after crude oil moved higher as noted above.
The CNN Fear & Greed Index, as noted from the chart at the upper right of p.1, is at or very near to “greed” levels and has been turning lower of late. Historically this is a very bearish sign for history shows that when this index moves above 75 and then turns lower that demonstrably weaker share prices shall soon follow, or that ownership of equity is not a sterling idea. We respect the validity and history of that Index given its composition and so as noted above we have chosen to become net market neutral but we’ll not likely become net long out or respect for that index and its history.
Which is just one part of the bad news for bears - after all, it is virtually impossible for the market to drop until Gartman "became net long." The second bad news? He is still long VIX.
Short One Unit of the US stock market via the VIX: On Wednesday, March 17th we “punted” on the short side of the equity market, but this time buying volatility; that is, we bought the VXX volatility index ETF listed on the NYSE upon the market’s opening. We’ve given this a rather wide birth and will allow the equity market to move 5% against us before exiting the trade and that means a move by the S&P to and through 2118, but we intend to move that stop down sharply… soon.
What little good news there was is that there are only about 40 points until Gartman is stopped out... just as the market hits its all time high again. Just as warned a month ago.