Yesterday, just as stocks soared following the greatly misinterpreted Xi Jinping comments, we noted that the market’s most accurate – if in a tragically inverted fashion – forecaster, Dennis Gartman, said that he was “considering turning bullish again”, clearly ignoring his “watershed” call for a multi-year market top.
At the moment we are neutral of shares for we have no position, but we shall admit that the rally from nearly 2585 in the nearby S&P futures to nearly 2645-2655 we would have had our bearish interest for as we write all we’ve seen thus far is yet another “inside day” where the trading action thus far has been contained “inside” that of the day previous. This was precisely what we’d seen the day previous and as we said here yesterday, “Inside days” are almost always continuation patterns that resolve themselves in the direction that the market was travelling previously. But…and again here is one of those very important “Buts’… Xi has us remaining on the sidelines, refusing to take bearish action and actually considering doing precisely the opposite.
Fast forward to this morning, when after yesterday’s face-ripping rally, Gartman finally had enough, and “watershed” call or not, decided to cover half his bearish call:
the rallies have been impressive and certainly they’ve been sufficient to have our bullish interest reawakened… something we’ve rather obviously not said since March 14th when we wrote our Watershed report and turned materially bearish of shares. However, as we said yesterday, Xi’s speech yesterday might have been a “Game changer.” Certainly, it appears to have been thus far… As for our retirement account, we did make a small adjustment in our positions, covering in half of the short position in the derivatives we had established only a day or two previous.
We hope this explains why stocks are suddenly sliding again.