One week ago, when we asked whether “it was time to turn bullish on stocks“, we listed several bullish catalysts as well as one rather bearish one: seven days after telling his bank’s retail clients he was taking profits (with stocks surging subsequently), JPM’s quant Marko Kolanovic flip-flopped and reverted back to what he had done every single week so far in 2022: tell clients to buy the dip…
… only instead of sounding like a broken record, Marko added some flair to his latest permabullish reco, and after asking rhetorically what should one buy, “Growth or Value?” he responded that one can “construct a ‘barbell portfolio’ of traditional growth (e.g., tech, biotech, innovation) and traditional value stocks (e.g., metals, mining) that currently have favorable attributes across most traditional factors. This is rarely the case and currently possible due to a specific confluence of macro factors such as the commodity supercycle, divergent monetary policy, and very large selloff in high-beta and growth stocks (domestic and international) in the first quarter.” In short, he said to buy “growth and value” which of course is short-hand for everything… and which is why one week ago we said that this “should be the clearest signal that one should take chips off the table and go short.”
Sure enough, since then stocks tumbled more than 200 points, and when we saw that this morning Marko was doubling down on – what else – being bullish, writing in his latest “JPMorgan View” note that “equities are likely to rebound this week” and that he sees “risks skewed toward a near-term equity rally given weak investor sentiment, low positioning, systematic strategy buying, seasonality, and oversold conditions”, we would have rushed to warn our own readers to double down on being bearish.
However, then something unexpected happened: an even more contrarian signal than Marko emerged after a long hiatus, and signaled that in this particular case, Marko may just be right… not because of any of the reasons he listed, but simply because Dennis Gartman, that infallible contrarian market indicator, was hitting the tape with some uber-bullish comments.
Speaking to Bloomberg Radio on Monday morning (just around the time Marko’s note was making the rounds), Gartman – who is somehow also chairman of the University of Akron Endowment – said that “I got stopped out of a lot of long positions on Thursday and Friday of last week” adding that he is “happy to be basically as flat as I’ve been in a long period of time.”
While Gartman, the former publisher of the legendary “The Gartman Letter,” which algos, quants, hedge funds wizards and pretty much everyone else read just to do the opposite (and which is now sent only to a small circle of “friends and famil” , in the past said he was wrong about a bear market in 2021, when the S&P index rose about 27%, his forecast for 2022 remains even gloomier… and thus a great hope for bulls everywhere that stonks just may shoot up to an all time high when the Fed announces it will start buying ETFs in a few months.
“It could go quite a good deal farther to the downside,” he said. “The use of margin has been declining. That’s always one of the signs of a top in the market. Be careful. I think it goes down another 5%-10% from here. At least. Maybe more. ”
Of course, a far better sign of a market bottom is Gartman saying a crash is imminent, and sure enough, after dropping as low as 4195, stocks are now some 80 points here and trading at session highs.
