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Tags: Dennis Gartman | investors | stocks | bear market

Dennis Gartman Sees 'Very Real Bear Market, Most People Not Prepared'

Dennis Gartman Sees 'Very Real Bear Market, Most People Not Prepared'
(Dollar Photo Club)

By    |   Wednesday, 02 September 2015 12:43 PM

Tuesday's loss of another 470 points, or 3%, in the Dow, yielded some of the most thoughtful commentary of the year as pundits opined about what investors and the Fed should do next.

Dennis Gartman, the publisher of "The Gartman Letter," told CNBC that he thinks stocks are in “a very real bear market,” having failed to make new highs and demonstrated poor volume and breadth.

He also fears that most people “are not prepared at all for it.”

Gartman called the circumstance “very dismaying” and pronounced himself “very bearish" of stocks. "I'd much rather be bullish. It's much more fun to be a bull in a bull market. In a bear market you have to be more careful."

He observed that energy has been a “harbinger” of where the market was headed. He thinks $50 will be oil's new high, after the price of oil plunged 8 percent on Tuesday, following a three-day ascent of 27 percent, the biggest such jump in 25 years. Oil plunged $3.79 a barrel, or 7.7 percent, to close at $45.41.

Elsewhere on CNBC, another commentator has joined the minority that has concluded the Fed will not act this year.

Steve Goldman, managing director at Capstream Capital, called the recovery “good, not great” and said inflation is low by several measures, “so there’s nothing that really forces the Fed’s hand, at least in 2015.”

He added that accommodative central bank policy is going to continue “to force investors into risk assets, and that means you buy on dips.” Yet he still sees investors, especially in Europe, seeking safety in Treasurys even as central banks are selling them.

Tim Evans, energy analyst at Citigroup, explained how an oversupply of oil brought an end to the three-day, 27% spike in oil prices, the biggest since 1990, mostly on the idea that OPEC “was willing to talk about cutting production in order to support prices,” not an actual change in policy. However, subsequent numbers have disclosed that there is still a substantial surplus.

Oppenheimer Chief Economist Jerry Webman dares to predict the bottom of the current correction slash buying opportunity because there are no indications that a recession is coming.

Joe Lavorgna, of Deutsche Bank, calls the US economy “largely unscathed,” but John Lonski, of Moody’s, disagrees that GDP is over 3%, citing an Atlanta Fed estimate of 1.3%, and he sees S&P sales up by less than 1% year over year, so managers will have to rethink capex and hiring.

For perspective, CNBC’s Deirdre Bosa reports from Vancouver that our frozen neighbor to the north, or south if you live in Detroit, is already in a recession as well as an election campaign.

Toronto stocks have declined 8%, due to the decline in energy prices and the global selloff.

Veteran technician Louise Yamada, of Tech Research Advisors, told CNBC’s Jackie DeAngelis that the stock sell-off “can continue a little bit more, indeed,” as the market has been oversold for three months.

With the S&P having declined for four months, “We could be looking at a bear market.”

She thinks the S&P can test the 2009 uptrend and recommends investors sell weak stocks. The Dow has already broken the 2009 trend, and Yamada thinks the S&P can fall to 1600.

“This would be a 24% decline and would hurt people who didn’t protect themselves.”

Ari Wald, Oppenheimer technician, compares this market to 2011. He thinks the 1867 low of last week needs to be tested and recommends consumer discretionary stocks but is concerned about energy and would sell, short, underweight, or avoid the sector.

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Dennis Gartman, of The Gartman Letter, says we are in a real bear market and most people are not prepared.
Dennis Gartman, investors, stocks, bear market
Wednesday, 02 September 2015 12:43 PM
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