Some can blame today’s plunge in oil on the increased oil production in the US, or perhaps the substantial distillate and gasoline builds, as reported moments ago by the DOE…
… but those who follow Dennis Gartman’s daily flip-flopping know very well what caused it.
Overnight, Gartman finally closed his 20-day old oil short and, drumroll, went long.
Short One Unit of Crude: Thursday, June 23rd, we were sellers of crude oil, selling both September Brent and WTI crude upon receipt of this commentary. We sold a half unit of each, selling September WTI at or near to 49.88 and September Brent at or near to $50.72/barrel. They are this morning $46.90 and $47.75 respectively and as noted above following the material shift in the term structure AND following the “reversal” to the upside, we wish firstly to cover this short position AND we wish to go long of crude oil at the same time. So we are buying two units of crude this morning; one to cover the short and the other to go long. We trust we are clear.
Oil then promptly crashed.
And as oil closes in on a $44 handle, we wait to see how long before Gartman’s lethal prediction that oil would never hit that price in his lifetime (which it did just three months later from the downside), will also be validated from the other direction.
Finally, here is Gartman ranting at the market:
Are stocks over-done on the upside? Yes, of course and that is stunningly clear from the fact that the CNN Fear & Greed Index finished yesterday afternoon at 88, a level exceeded only once in the course of the past three years when it touched 93 back in the spring of ’14. However, even then the market continued to run to the upside and it is worth remembering that fact. The market was egregiously over-bought then and it became even more egregiously over-bought in the weeks and months ahead. As Keynes said, “The market can remain irrational far longer than we can remain solvent.” The present “irrationality” may persist and likely shall. It may be illadvised… and very so… to initiate long positions here, but it is still wise to remain long of what one owns in order to participate in the “game” as long as the music is still playing. There will come a time when the music stopes; when the reality of the situation created by the world’s leading central banks hits and hits hard and when the game turns ugly and bloody, but that time is not yet upon us. So we are to dance while the band plays; the champagne’s cold; the ladies are beautiful and the men are handsome, for soon enough it will all change… the only question is “When?”:
As Lord Keynes reminded us, the market can remain illogical far longer than we can remain solvent, but when we couple Herb Stein’s dictum with that of Keynes we know intuitively that something is going to give; that these closed end fund premiums are doing to collapse and that this will end badly. It’s a given; it will happen!
Maybe the market is rational after all?
via http://ift.tt/29PMGdi Tyler Durden