Equity Prices: Utterly & Completely Confusing
September 19, 2016
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
SHARE PRICES HAVE FALLEN JUST A BIT SINCE FRIDAY as our International Index has fallen 16 “points” or just a bit more than 0.1%, led downward by weakness in European and South American share prices; however, with the return of the markets in mainland China and Hong Kong… both of which are nicely higher following better-than-expected economic news out of the former… stock index futures here in the US are trading better and all things being otherwise equal should likely remain so at least through today’s opening later this morning. Given the small scale terror attacks in New York and Minneapolis over the weekend, which would generally have been expected to put downward pressure upon stock prices, this modest strength we find both a bit surprising and interesting.
We have found the movements of the markets… whether here in North America, or in Europe or in Asia… recently to be utterly and completely confusing. Multi-hundred point declines in the Dow industrials one day with the market closing hard upon its lows, only to see the market move multi-hundred Dow points higher the next day and then to close hard upon its high, only to reverse again the next day and then to reverse still another the next and in the end leaving the market unchanged but having traversed a thousand Dow points is incomprehensible and is certainly not investible. Those willing to break all the rules of following volume and trend; those will to toss aside years of understanding gained from monthly reversals to the downside and multi-month long trend lines being broken decisively to the downside; those willing to accept increasingly fragile earnings reports and earnings surprises to the downside… those willing to do all of these things that we’ve never been able to do and never shall be able to do shall do well. “Selling rips and buying dips” has never been, nor ever shall be, our forte; but for now it is the only working, functioning course of action.
Turning to gold we remain, as we have for years remained, long of gold in certain terms and we are obviously a good deal happier to see it trading above the support that has held for the past several weeks at €1168-1172, but only marginally so. As we suggested last week, we were hopeful that that support would indeed hold and that was precisely what has happened.