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Does Euro Reversal Signal 'All Clear' For Commodities?

Monday, 22 Mar 2010 | 5:43 PM ET

Despite recent gains in the XLB and euro , strategic investor Dennis Gartman, author of The Gartman Letter, doesn't think weakness in commodities is over, not by a long shot!

Although materials can certainly climb higher on the back of global economic recovery he thinks headwinds facing the sector are far more powerful than tailwinds.

We're talking headwinds such as the financial woes of Greece as well as other parts of Europe. The threat of defaulting on sovereign debt is just too serious and as a result he expects the major theme in commodities to remain euro weakness and dollar strength.

Commodities Roar Higher
Commodities are rallying following the euro's reversal, with Dennis Gartman, The Gartman Letter.

"Just because the euro bounced from 134.50 up to 135.80 on Monday afternoon, investors got all excited and said that's the end of the euro (weakness). Well I say no it's not," Gartman explains.

"It's not a problem that's going away anytime soon," he adds. "The euro as well as Britain's pound have a long way to go to the downside."

But don't think that means commodities remain under pressure for a month or two, Gartman is looking at a much longer term time horizon!

"I've seen these things play out before," says Gartman. "They don't go away in 3 months. They go away after a period of a year and a half or so."

"I agree," says Brian Kelly of Kanundrum, "the market has it all wrong."

What do you think? Did the market get it all wrong? Tell us now!

In case you're wondering Dennis puts his money where his mouth is. Funds managed by Dennis Gartman are short euro and are short British pound.

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* In Tuesday’s Gartman Letter Dennis will write about how the high prices in crude have allowed for an expansion of reserves. "We’re finding oil in places we never thought we’d find oil and we’re finding oil in places we thought we’d exhausted."




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Trader disclosure: On March 22nd, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Najarian Owns (AA) Calls; Najarian Owns (BAC) Call Spread; Najarian Owns (C) Calls; Najarian Owns (CLX) Calls; Najarian Owns (MCD) Call Spread; Najarian Owns (MLM) Calls; Najarian Owns (MYL); Najarian Owns (PFE); Najarian Owns (TEVA); Najarian Owns (YHOO) Calls; Najarian Owns (OSIP) Calls; Najarian Owns (DD) Calls; Najarian Owns (BBY) Call Spread; Najarian Owns (AKAM) Call Spread; Terranova Owns (QCOM), (OIH), (POT); Terranova Owns (GS) April Puts; Terranova Is Short (UAUA); Terranova Is Short (CAL); Terranova Is Long May Crude Oil Futures; Terranova Is Short (GS); Karabell Owns (C), (JPM); Cortes Owns (IBB), Is Short S&P Futures; Kinahan Owns (C), Is Short (C) Puts; Kinahan Is Short (SPY) Through Options; Karabell Owns (GOOG); Kinahan Owns (WFC), Is Short (WFC) Puts

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