Is Gartman Right About Shorting the Dow and Gold?

Includes: DIA, GLD
by: Keith McCullough

"Short Of" Garty?

"Thinking well is wise; planning well, wiser; doing well wisest and best of all." -Persian Proverb

Of course I am not “short of” the man. As all Early Look titles go, we have to have some fun at these un-Godly hours of the macro morning. Dennis Gartman is one of the great grinders of the early morning gridiron. The investment community is a better place with him in it.

This does not mean, however, that I need to subscribe to the panting dog nodding that CNBC’s Fast Money’s producer must force his “Traders” to look into the eye of the camera with when listening to the Gartman gospel. Someone has to hold the members of this circus act accountable. The American Financial system is being You Tubed by the world, daily, and it’s just too embarrassing to know that The Client (China) thinks that this is what US investors do.

So Garty, let's slap the ole red, white and blue accountability pants on and take a walk down the path of a few positions that you are currently “short of”, The Dow and Gold:

1. I have also been “bearish of” the Dow via the DIA etf, but covered my position on Wednesday’s weakness

2. I am long Gold via the GLD etf, and remain “bullish of” it

Not to be mistaken for that one Fast Money Trader who pronounces the world’s most relevant growth economy with an “R” at the end of it (“China-r”), we must give the proper attribution to the “bearish of” or “bullish of” lingo – this is Garty’s - and he remains The Man for beating his own path with it.

Let’s get back to “doing well” as it’s the “wisest and best of all” positions. Being the capitalist that he is, we want to make sure Garty has every opportunity to get these positions right.

1. The Dow Jones Industrial Index

- Garty is right, the Dow is trading below the 200 day – but that’s far from a unique short thesis; this is not a “truly ominous” chart to be “short of”

- Immediate term TRADE support = 8153

- Intermediate term TREND support = 7782

2. Gold

- Garty must know that he is getting this one wrong (after all, that almighty 200 day moving average that he is “short of” with the Dow = gold $856/oz)

- Immediate term TRADE support = $897/oz

- Gold is about to lock in its second consecutive week of positive price momentum, and it’s threatening to break out again to the upside.

Now don’t get me wrong here, I don’t think Gold busts out to higher highs, yet… nor do I want to be “long of” the Dow. As prices change, my view on all things do as well. I am not wed to any position other than my marriage to Laura. I was “short of” Fast Money’s “long gold, short America” call in early March, remember. Garty, for accountability purposes, have someone forward you my Early Look of 2/19 titled “Long America, Short Gold” – I get the short case, but only at a price.

One way to really perform in markets is to understand how the other players on the ice play. If you can proactively predict their patterns of behavior (200 day moving averages for instance), you can always put yourself in a position to trade ahead of them. This isn’t a complicated strategy. Remember, “Thinking well is wise; planning well, wiser…”

Garty, like you, I’m in it to win it here and I want to see you keep winning man. If the Dow is down, at a bare minimum, just cover your short. As for being “short of” gold, well, I know that you know that I’m right on this, so… cheers to changing as the facts do.

I have downside support for the SP500 at 881 and upside resistance at 931. Buy low, sell high, capitalize on consensus, and trade the range.