For anyone who still doubts the power of fading Dennis Gartman, let this be a lesson to you.
From his Tuesday, August 9, Gartman Letter:
Cotton prices have plunged overnight on the news that China will extend its sales of cotton from its reserves through the end of September. China has been selling cotton from its reserves for the past several months as demand from its cotton spinners for supplies to meet the demand for cloth have increased materially. This time, however, China has increased the amount of cotton it will released, previously stating that it was going to allow for 1.7 million tonnes of cotton to be sold from the reserve but now increasing that to 2.0 million tonnes. We have been waiting for this announcement to finally step up to buy cotton and with prices plunging today we’ll do exactly that. Those who cannot trade futures should avail themselves of the cotton ETF, BAL, listed on the NYSE. However, be certain to put in limit orders, not market orders. Cotton is trading 2% lower this morning and thus orders in BAL should be placed 1.9-2.1% below last night’s close, but no higher.
NEW RECOMMENDATION: We’ve waited to own cotton on a break and it is breaking hard this morning on the news out of China discussed above. We’ll buy new crop December cotton at or near to $74.25 and for now we’ll risk no more than 2% on the trade. Those using BAL… the cotton ETF… should be prepared to buy it on a limit order no higher than $49.60 vs. the close yesterday on the NYSE of $50.69
And then, from Wednesday, August 10, some 24 hours later.
We hand here at TGL, had a second ill day in a row, wrecked by our position in cotton, for we bought the cotton ETF and suffered sharply as a result. For the year-to- date, we are up 4.8%, now modestly under-performing our International Index and rather badly under-performing a simple long position in the S&P.
It has taken only twenty four hours to prove us wrong and we are stopped out for a loss of a bit more than 2.5%. We’ll return to cotton… sooner rather than later, but for now we are wrong!
Remember: Gartman is now bullish: “We’ve no choice. We have to dance with TINA… There Is No Alternative…until the music stops even though we do not like the music and we do not like the band.”
via http://ift.tt/2b9nJMS Tyler Durden