In our overnight wrap moments ago, when previewing today's action, we said that "absent some dramatic reversal, such as Gartman covering his shorts and going unexpectedly long, expect the low-volume, upward momentum to continue into the G-20 weekend." Well, as the bible says, ask and ye shall receive.
In Gartman's just released note, we learn that the recurring Fast Money guest has indeed finally thrown in the towel, and after putting on S&P shorts at 1926 some time ago, has finally capitulated with the market once again going sharply against him. To wit:
We have been short one unit of equities in rather global terms, by being short one third of a unit of US equities; one third of a unit of the EUR STOXX 50 and one third of a unit of the Nikkei. The trade started off properly and almost immediately we were profitable; however we are now almost at a small loss on the trade… and actually we are marginally profitable. This is a concern and we fear that perhaps we are about to see a period of time when the monetary authorities throw caution to the inflationary wind, expand the supply of reserves to the banking systems around the world in a fashion that really can only be considered egregious with caution tossed to the winds. That is, we may be in for a period of time when gold and equities move in tandem together to the upside
At any rate, although we were willing to risk this position rather materially from its outset, we are not willing to do so now. Hence, rather than waiting to be stopped out of our position some 3+% higher we wish to cover the position immediately upon receipt of this commentary, taking a very small profit and refraining from taking a loss and living to fight another day and in the end succeed.
This from the same pundit who just yesterday said:
There are many still arguing that this is not a fully-fledged bear market, but they are wrong. This is not only fully fledged, this is a fledged carnivore rather than a herbivore, for this bear market is consuming everything in its path with no intention of slowing down its “eating” habits.
Truly so much changes in 24 hours.
As noted above, it is unclear just how the S&P short position generated a profit as it was put on at lower levels, but as usual, bless Gartman's math. As he adds "given that we are up 8.3% year-to-date and despite the fact that we did not keep up with the change in either the S&P and/or our International Index we have outperformed the S&P thus far this year by 12.8% and we have outperformed our International Index by 16.5%."
Ok then.
But more importantly to those whose only alpha generating signal is fading Gartman, here is an even more important update:
Look then at the chart at the bottom left of p.1 this morning and note that the very well defined downward sloping trend line extending back for months is in the process of being broken through from below.
Note further that the low made in mid-January, couple with the low earlier this month and further coupled with the low made earlier this week have combined to create a “reverse head and shoulders” pattern on the chart… a pattern that is almost always powerfully bullish. We shall act upon this changing pattern by stepping up to buy crude oi this morning upon receipt of this commentary
And sure enough:
NEW RECOMMENDATION: Long of One Unit of Crude oil: We wish to buy one Unit of crude oil as noted above and we’ll focus our attention upon both Brent and WTI, buying half a unit of both this morning. We’ll buy May futures and as we write May Brent is trading at or near to $35.55 and May WTI is trading at or near $34.85. We’ll have stops in Monday’s TGL, but for now we’ll not want to see prices move and close more than 2.5% against us. So for now our stop shall be $34.65 for Brent and $33.95 for WTI.
You know what to do.