On Friday, with traders scratching their heads to explain why the Dow Jones surged as much as 400 points after a poor payrolls report, where both jobs and hourly earnings missed, the answer was once again to be found in what Dennis Gartman had said earlier in the session, which was the following: “the only thing we did yesterday was to sell a bit of the US market short late in the session… a very, very little bit… via the derivatives market”
Gartman this morning: “the only thing we did yesterday was to sell a bit of the US market short late in the session… a very, very little bit… via the derivatives market”
— zerohedge (@zerohedge) May 4, 2018
Everyone know what happened next.
So what is the world’s most consummate momentum chaser doing this morning? If you said he covered his short and is once again bullish, take a bow. From Gartman’s latest note:
In Friday’s “letter” we had the charts of the Nikkei and the S&P with trend lines drawn on both indicating that the former’s trend since late March was up while the latter trend over the same period was down. This morning we have the chart of the Euro STOXX 50 and the S&P and the trend of the former since late March is also “from the lower left to the upper right” while the chart of the latter is “from the upper left to the lower right” definitively.
Regarding our retirement fund, we made some modest changes on Friday following the release of the Employment Situation Report. We moved to cover the very small short position we had via derivatives as quickly as we could, and we added to our short bond market position… not materially but just in the consistent manner of “doing more of that which has been working and less of that which has not.”
What is amusing is that Gartman is pretending he was not stopped out on his 10Y short, which as we showed on Friday, dropped clearly below 2.92% , his stop loss point.
Today, he repeated his reco:
Short of One Unit of the US Ten Year Note future: The bond market has rallied ever-so-slightly the past several days, going from being aggressively over-sold to neutrality and in protracted bear markets neutrality is all one can ask. Wednesday, May 2nd…remembering that the bond market is now two years into a bear market and that the supposed line-in-the-sand at 3% will prove ephemeral as the ten year trades to 4% and perhaps 5% over the course of the next two or three years… we were sellers of the ten year note future, willingly risking the yield to drop to 2.92 from 2.98, and stating further that when the yield moves upward through 3.02 again we shall add to short positions. As we wrote, the ten-year note future was trading 119 11/32nds. It is 119 11/32nds presently so we are breaking perfectly even at the moment. For those who cannot trade futures, the Short Bond ETF… TBT… opened on the NYSE on Wednesday at $38.00 and closed Friday at $37.80.
Which, of course, is good news for bond bulls.
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