If the algos were waiting for just one catalyst to unleash the buy everything, sell VIX program, they may have gotten it moments ago when, following a global rout across markets on yet another day of North Korean nuclear war concerns, Dennis Gartman, staking his “reputation” said that he is “fearful… very… that this wondrous bull market that began in the spring of ‘09 has come to an end and we do not make this statement lightly for we know the damage that can be done to an already damaged reputation if this statement proves to be wrong.”
Judging by the spike in futures after today’s 5th consecutive miss in CPI, which paradoxically has now pushed the dollar higher, Gartman’s “reputation” suddenly appears in peril.
His key thoughts excerpted below:
There are two questions facing us this morning regarding investment in equities. Firstly, will the “Machines”… the algorithmic buyers… trained only to buy weakness step to the fore once again and buy equities with abandon? We must remember that the “Machines” have a very limited memory; they’ve no memory of decades past and of protracted bear markets. Instead, their algorithms tell them to simply buy weakness and this, clearly, is weakness. So shall they? That is THE question.
Secondly, we wonder if the supposed support for the market here in the US at or near 2435 in the nearby S&P futures… and in the “spot”… will hold, for as the chart included at the bottom of p.1 would seem to suggest that support absolutely must hold. As we write, it is and as the day progresses it must.
We have our very serious doubts however and those doubts are raised for a number of very real and very serious reasons, not the least of which is that some of the truly best and brightest investors of our age are retreating or have already retreated to the sidelines, fearing the arrival of at least a material, damaging correction of some 7-10% or perhaps even the onslaught of a true bear market. Paul Singer… in our eyes one of the five best investors of the age… of Elliott Management has said that he is prepared “For all hell to break loose.” Bill Gross… perhaps the preimminent bond market analysts/trader/investor of the age… has gone on record as stating only just recently that the risks of equity ownership are as high as they were in ’08, and that at this point when buying weakness “instead of buying low and selling high, you’re buying high and crossing your fingers.” And then there is the always quotable… and genius… Mr. Howard Marks of Oaktree Capital who’s gone on record to suggest that the “perpetual motion machine” that everyone has come to believe the stock market to be to the upside has ground to a halt.
Finally, we wrote yesterday about the rare nature of the “unanimity” of movement in stocks around the world and said
the fact that there is unanimity of weakness is important to us for this is a rather rare event. Indeed, history shows that unanimity of market movements such as this happen at the beginnings of and/or the endings of protracted trends…
[Thus]… bull markets end with either a “universal” day higher, or to see it end with a day such as the current day when all ten markets turn lower. In other words, we do not take this sort of unanimity of direction lightly, but rather we pay it very serious heed
We are indeed fearful… very… that this wondrous bull market that began in the spring of ‘09 has come to an end and we do not make this statement lightly for we know the damage that can be done to an already damaged reputation if this statement proves to be wrong. But the monetary authorities who’ve sponsored this bull market with their massive injections of money borne out of the ether have begun the process of either standing down from that monetary expansionism or have at the very least chosen to slow the process… either of which shall be deleterious to equity.