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Fartman

Marginally net long! That's how you beat the market Stocks in global terms have fallen by 0.8% since we marked the markets for the first time this week. For the year-to-date, stocks in global terms are actually down 2.2% while stocks here in the US as represented by the S&P are up 1.7%. Further, the bear market that began in late May of last year when our International Index hit 11,185… its all-time high…is now all the more severe for stocks globally are down 17.2% and a decline by that sum is bearish in anyone’s estimation. More weakness is likely. Note then the swift/sharp decline that has taken place in the CNN Fear & Greed Index. This index has fallen from 80… a historically high level that argued for weaker share prices… to 53 presently and it is heading toward “fear” levels with uncommon speed. It may take several weeks and a great deal of distance to the downside before “Fear” is the driving force in the markets and it shall then be right to be a buyer of equities once again. As for our own positions in our retirement fund, for the year-to-date we are +3.3% and are thus beating the year-to- date returns of both our International Index and of the S&P. We are marginally net long as of last night’s close although we became marginally net less so early in the session as we added a bit to our short derivatives position. We are long of the same high-tech, “cloud” related equity that we have been long of for the past two weeks and we are long of metals, but rather than being long of aluminium we sold out of those shares and replaced them once again with the shares of the US largest steel manufacturers. We are long also, of course, of gold in EUR and Yen denominated terms.
FX:SPX500Long
by DennisGartman
Buying Equities Here Shall Be In The End An Ill-advised ActionWe begin then by noting that the CNN Fear & Greed Index is still above 80 in openly “greedy” and thus openly over-extended-to-the-upside territory. Some might call this “nose-bleed” territory and we shall strongly… indeed very strongly…suggest that buying equities here shall be in the end an ill-advised investment philosophy or action. We remain, however, modestly net long of equities given that we are still long of aluminium ; long of a small energy production company’s shares and long of a high-tech , “Cloud” related company’s shares , all of which have done quite well recently. We are long too, of course, of gold in EUR and Yen denominated terms ; but we have derivatives positions in place sufficient to reduce our net long position to something which we’ve referred to as “pleasantly” long: long, but not materially so. We shall sit tight then and do nothing more… at least for the moment. Finally, concerning what has happened of late to Pershing Square and Mr. Ackman, we had a discussion with a friend in the hedge fund industry yesterday… a “rival” of Mr. Ackman’s… whose “take” on this question was most interesting. Our friend is convinced that Mr. Ackman’s effect upon the hedge fund industry may in the end by more dismaying than the effect that Mr. Madoff had upon it, for Madoff was a matter of criminality that should have been discovered but was hidden for a long while from view, while Ackman’s actions have been long standing, inexorable and perhaps repeatable by others, creating fear amongst institutional investors who will, in the future, be unwilling and/or unable to put money at risk in these same manners. Money will not, in the future, allow itself to be gated, and in response the entire hedge fund industry will be diminished. Once again, averaging down into long positions while averaging up into short positions… and continuing to do so even as the trend is clearly against one... is what we have referred to as the sole “carcinogen” in the investment/trading business. The demise of Nick Leeson; the collapse of Sumitomo Metals; the problem caused by Mr. Kerviel at SocGen… all came about by adding to losing positions and by disregarding risk. It is our duty to avoid such nonsense. Hopefully we shall continue to do so.
NASDAQ:MSFT
by DennisGartman
Clearly this is bearish!!SHARE PRICES, SINCE FRIDAY’S MARK, HAVE MOVED NOWHERE as our International Index has lost one single point as five of the ten markets in our Index have fallen and as five have risen. Given that our Index finished last year at 9,556 and given that it is 9,238, for the year-to-date stocks in global terms are down 3.3%, while stocks here in the US as represented by the S&P are as close to unchanged as they can be for the S&P closed last year at 2,044 and it closed Friday at 2,046. What is more important, however, than the year-to-date change is the change from our Index’ all-time high late last May at 11,185, for from that high stocks globally are down a very material 17.4%. Clearly this is bearish; clearly stocks in global terms are not bullishly inclined and clearly too here in the US , as evidenced by the chart of the NASDAQ included here this morning at the lower left of p.1, the very nature of the US market is turning for the worse as the upward sloping trend line that has defined the bullish run here in the States is about to be put very much to test. Quietly, but steadily, in our own account… our retirement funds here at TGL and the only money we manage but money that is really rather important to us, obviously!... we are turning bearish of equities. Friday, because our position in aluminium has been turning against us, we cut that position yet again, for we always try our best “to do more of that which is working and less of that which is not.” We began cutting that position late two weeks ago and quietly but steadily cut it back last week and now have 1/3 of the position that we had on at its peak. It’s hurt us badly that we did not cut it more swiftly and more severely, but that is the nature of our trading activity; we are relatively slow to add to positions and we are equally, but relatively slow to cut them back, but do it we have. For the record, as of Friday’s close we are +4.3% for the year-to-date, out-performing our International Index handily and still out-performing the S&P and thus most hedge funds; but clearly the past two weeks have not been our best. Today, however, given our positions in gold we should see the “spread” between our performance and that of the broad global and parochial US markets widen pleasantly in our favor.
FX:SPX500Short
by DennisGartman
[Gartman Report] Buy Oil NOW !We are weary… and very so… about hearing of the supposed strong relationship between stock prices and energy and we have had quite enough of it to last a very long while. The simple fact of the matter is, judging from the two charts the page previoius of WTI crude and the S&P in monthly terms going back to the spring of ’11, that if there is a correlation between the two it is utterly negative, not positive. Note then that since the spring of ’11, stocks have gone higher, and markedly, relentlessly so. What then of crude oil prices? Well, they have gone markedly and relentlessly lower. So, let us put this nonsense behind us that crude and stocks trade one with the other; they do not, and thinking that they do can and will lead to eventual chaos and massive losses… both of mental and real capital. ‘Nuff said, save to say that it is time to buy crude oil and to sell equity futures, with the only problem now to decide how to weight the position; that is, do we sell equal dollar sums on both sides or do we weight the trade for “beta,” if there is such a thing for crude oil. We shall try to research that today and tomorrow and perhaps for most of this week, for that shall be a critical, deciding factor in the implementation of this position
FX:USOILLong
by DennisGartman
1
When the facts change, I change -- Dennis GartmanWhen the facts change, I change; What then do you do, Sir? The facts are changing in the world of crude oil; demand is still rather strong and supplies seem to be rising but only modestly. Further, the term structures are shifting. We had been, on balance and really quite openly, bearish of crude for the past several years, erring always to sell crude’s rallies rather than to buy crude’s weakness. That has been wrong for the past two months and it is time to acknowledge that “wrongness.” If the facts are indeed changing… and certainly they seem to be… then we too must change. Lord Keynes did; we must also.
FX:USOILLong
by DennisGartman
1