So much can change in ten days.
Having entered last week short, “world-renowned commodity guru”, Dennis Gartman, got spooked last Tuesday when faced with the relentless melt-up in global stocks, and admitted that he had “been wrong… badly… in taking even a modestly bearish view of the global equity market and effecting that bearish view via a position in out-of-the-money puts on the US equity market bought a week and one half ago.” He then said he would immediately cover his short “and covered it shall be” because as he then explained, he was afraid
“…we are about to enter that violent… and ending… rush to the upside that has ended so many great bull markets of the past. At this point, the buying becomes manic and prices head skyward. Speculation is the order of the day, not investment and when such periods have erupted in the past prices have gone parabolic until such time as the last bears have been brought to heel and the public has thrown investment caution to the wind. We’re there now; this may become wild.”
Fast forward to yesterday when, with nothing but price momentum changing in the interim, Gartman’s flipped 180 degrees, and boldly predicted that “the bear market is upon us we fear”:
Today’s ‘universal’ weakness…only a week from the global market’s all-time high… is a harbinger of further material weakness we fear and sets the stage for the start of what we fear might well be a bear market of some serious vintage. There is concern… very real concern… on our part that one market after another has broken its upward sloping trend line that has heretofore been very well defined. A trend line drawn across the recent lows of the Dow has been broken; a trend line drawn across the recent lows of the S&P has also; trend lines of the Russel… of the Nikkei… of the DAX… of the EUR STOXX 50… of the Tadawul in Saudi Arabia… have all been broken, and we can go of if need be but our point here is made. Something material has happened to the global equity market and only the most fervent of stock market bulls shall not recognize that fact.
The equity market, by its very definition, anticipates the change in the economy, rising before the economy rises and falling before the economy falls. We are at the latter tipping point. It has been months in the coming, but it is here and adjustments in one’s investment policies must be made accordingly. The bear is upon is, we fear.
This post was published at Zero Hedge on Nov 16, 2017.