Anyone hoping to get some fadable directional hot takes from the latest, Monday edition of the Gartman letter will be disappointed. Instead, Gartman helpfully points out that unlike recent days in which momentum blows all one way or another, today is different. Here’s why:
STOCK PRICES IN GLOBAL TERMS HAVE WEAKENED A BIT MORE as our International Index has fallen 40 points or just a bit more than 0.3% but it’s done so in a rather unusual manner as 6 of the 10 markets comprising our Index have fallen while 4 have risen, which would seem to be rather evenly balanced. However, what we find unusual is that three of the six market that are weaker have fallen by more than 1%… noted as always in red in the price matrix below… while two of the four that have risen have done so by more than 1%… noted as always in “green.” Normally, or perhaps better said, “commonly,” if there is “red” on the board that is all that there is, or if there is “green,” there is green only. Today we’ve both “red” and “green” markets and that we find interesting. What the means is open to debate.
Next, some observations from Gartman on sentiment:
Regarding the market here in the US, the first thing we draw attention to is the “chart” of the CNN Fear & Greed Index. It is at 7 and it has been in “single digits” for the past two weeks as prices have fallen, having gotten very, very near to 80 only a month or so ago marking an egregiously over-bought market condition then that has obviously been corrected. Historically when this Index has fallen below 20 and then turns higher and moves back above 20 it signals a bounce of some material sort shall soon be upon us. We shall watch for that signal; however, when that signal comes it shall suggest only that a corrective bounce in a bear market is underway that shall give everyone who has found themself caught bullishly off-guard the opportunity to reduce that exposure… materially. This is a bear market and bear market bounces are to be sold into.
Finally, here’s how Gartman is trading this market and his big picture parting thoughts:
As for our retirement account, we actually stepped into the market and bought one of the major sand suppliers to the fracking industry on Friday with the stock having fallen by nearly by 55% since early August and as we turned bullish of crude oil on Friday. The shares traced out an interesting “reversal” to the upside in the process. We partially hedged that position with a short derivatives position later in the day when the Dow had rallied nearly 425 points… 425 points!… from its low [Ed. Note: To put the size of this sort of inter-day volatility in proper context, when we entered the markets on a full-time basis in the summer of ’74 the Dow was 475!]. Otherwise we’ve chosen to sit tight with our bond and bond-like positions and gold. Finally, we shall end today’s discussion on equities with the admonition once again that we must always remember that in bear markets he or she who loses the least wins.
Needless to say, the algos will be confused.
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