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Gartmanreport

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