FYI | Sep 02 2010
By Rudi Filapek-Vandyck
Investors shouldn't be surprise by this week's sharp upward movements on global equity markets, reports US based trading guru and publisher of his own daily newsletter, Dennis Gartman.
For starters, yesterday marked the first day of a new month. That, explains Gartman, almost always means net inflows of funds into investment.
“Thus far that has meant greater inflow of funds into the debt markets of course but funds will obviously flow into equities… today and perhaps on into tomorrow afternoon even ahead of the Employment Situation Report due on Friday.”
One other factor supporting rising share prices this week is the fact that, historically, the US share market has tended to rise ahead of the Labor Day holiday, says Gartman.
As I reported earlier this week, Gartman's commentary on the US share market turned unequivocally negative last week, and he has seen no reason to change his basic premise. In essence, opines Gartman, price charts for the S&P500 “hardly encourage one to punt aggressively from the bullish side”.
He does think the market might well continue rallying a bit longer though. “We shall look for the market to rally on into next Tuesday and then with Rosh Hashanah only two days into the future and with the old trading aphorism “Sell on Rosh Hashanah/buy on Yom Kippur” ringing in our mind we shall tend to sell the market short.”
“Can the S&P trade back toward 1080-1090 then in the interim? Of course it can and by then it shall be inordinately overbought”, he concludes.
