Tuesday, March 27, 2018

Market rallied yesterday due to over-sold conditions

Dennis Gartman reaffirms that we are in a Bear market. He notes the volume and other indicators that suggest the top has already been made. 

The volume is still following the trend; that is, volume rises as prices fall and falls as prices rise. 
To that end, we are remaining short of the equity market here in the US with stops on our positions drawn down materially to make certain that our once material profits are not turned into losses, but we are otherwise holding to our thesis that stocks have entered into a global bear market; that the high made by our International Index on January 29th shall not be violated and that the proper course of action by those who are long of equities is certainly to avail themselves of this opportunity to reduce the exposure one more time before that opportunity is lost. 
Nothing has changed fundamentally that caused us to become bearish of equities, for the P/e multiples remain egregiously over-extended, as do P/book value multiples. However, most importantly of all, the monetary authorities, whose aggressive additions of reserves to the world’s banking system created the bull market initially, are changing their course of action. Rather than adding reserves to the systems they are now in the process of withdrawing them at a time when the demand for capital on the part of plant/equipment and labor is high and is rising. That was our thesis when we issued our WATERSHED report on the 14th of this month and that remains our thesis this morning. 

via zerohedge