Then, one week later, on April 26, Gartman announced he was shorting the Nasdaq. Just hours later, he was stopped out of his short again, leading to major losses (if only in Gartman’s paper “retirement” account, and credibility of course).
So has the famous momentum chaser finally learned to stop chasing the market at a time when momentum-chasing has become the single worst trade? Why not at all, because just over a month after his “watershed” call that “equity markets have hit multi-year highs”, and after getting stopped out twice in one week on key shorts, Gartman has decided to turn bullish again, stating that what he so solemnly declared 6 weeks ago was the end of the bull market was really just… a correction.
No, this is not the onion, this is Gartman’s latest letter to investors.
THE S&P: Perhaps Three Month’s of Correction Was Enough?: We made no excuses for erring bearishly of equities for the past several months, but perhaps we’ve seen the correction having run its course? Certainly it would seem so.
Let’s be clear here this morning: For much of this year we’ve been generally bearish of equities and for much of this year… and certainly since late January…we’ve erred on the side of being short of equities when we’ve traded. Since January 29th, when our International Index peaked at 12,857 stocks have indeed been weaker. Since, peaking in January when it traded very near to 2,850 the S&P has been trending lower and closed Friday evening at 2,670. Since peaking last autumn… and then again in late January, the EURO STOXX 50 has fallen from 3,700 to its low just below 3,200 and finished last week at 3,450. The German DAX, having peaked January 23rd at 13,560 reached a low of 11,787 in late March and has since rallied to 12,580. Finally, since peaking on January 26th at or very near to 33,150, the Hang Seng index fell to 29,500 earlier this month before finding support.
The point here is that having erred bearishly of equities for most of this year that has been the proper course of action; but we shall change that this morning from “has been” to “was,” for it is now proper to err bullishly of shares generally. Further, we are to err most bullishly of shares in those countries where the monetary authorities are continuing their QE experiments and that shall include Europe, Japan and China. The Bank of Japan has made it clear that it has no intention at all of ending its QE “experiment.” The Peoples Bank of China has just cut reserve requirements… a move we have always considered to be perhaps the most expansionary of all monetary experiments and the ECB has said it shall only “consider” moving toward tighter policies at some point in the future but certainly not immediately. Only the US monetary authorities are on the path toward tighter policies:
So what is Gartman buying? Why the most opaque and un-analyzable company of all it appears: GE.
Turning then to our retirement account, on Friday we did what we had recommended all of our readers to do the day earlier: we got neutral of equities and we did so by buying in much of our derivatives short position and buy buying the shares in and old guard, industrial company (GE) at the same time.
Today we shall be in buying back more of our derivatives short position and at the same time we’ll be buying equities domestically and abroad.
Looks like David Tepper was right.