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Gartman: Rally in Euro To Be Short Lived

The euro hit a 2 month high Friday on stronger than expected data out of Germany and as Spain made plans to bail out its banks.

Considering the recent gains, is it time to put that bear costume back in the closet?

Not according to strategic investor Dennis Gartman, author of the Gartman Letter.

He’s negative on the euro and despite the rally he remains negative.

”A year ago the euro was trading about 1.6 to the dollar and now it’s trading 1.36. In the scheme of things is the euro demonstrably lower than where it was 6 months ago – even 4 months ago? Yes.”

And Gartman expects that longer-term trend -- from the upper left to the lower right -- to continue.

”Have the fundamental issues facing Europe – the philosophical problems, the productivity problems, the problems with the banks – have those problems gone away? Not at all.”

But don’t run out and establish a short position right now.

”When I trade the euro I will be a seller,” Gartman says, “but I won’t sell until the market tells me I should.

Of course that begs the question, when will he sell?

When the euro rolls over and declines again, he explains. In other words he'll wait for a momentum shift. "And I think that it shall decline again.”

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WHY AREN’T WE RALLYING MORE ON STRONG EARNINGS REPORTS?

The traders spent Friday trying to better understand weakness in the market, despite an earnings release from bellwether GE that was bullish by most any standard.

The corporate goliath and parent of CNBC beat the Street helped by the recovery of its finance arm and a rise in revenue at its industrial units, including a sharp pickup in sales of locomotives.

Nonetheless, both the Dow and S&P pared gains into the afternoon.

What should you make of the market action?

Steve Grasso is skeptical. "Investors are just looking for reasons to lighten up the portfolio, he says. Grasso doesn't like that the market was unable to hold its gains.

Brian Kelly is also concerned by the market action. "I was surprised that the market wasn’t up more than it was," he says "GE is a great bellwether. I'd be a seller broadly, or at least a buyer of puts for protection."

Patty Edwards is a little more optimistic. She expects the market to hold about where it is. "Although I'm cautious I also think there are buying opportunities. I picked up Oracle ."

Pete Najarian thinks it's all about the Vix . "As long as we stay below 18.25 I’m positive," he says.

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INDUSTRIAL STRENGTH

Industrials topped the tape on Friday with the XLI hitting a fresh 52 week high, fueled by a big beat out of our parent company GE. In fact, GE hasn't traded at levels this high since April 30th.

What’s the trade?

With GE back at its April highs, I'd wait to see if it can break above those levels before you hit the buy button, counsels Steve Grasso.

When I look at the numbers that GE posted, it makes me think bulls now have the catalyst they need to drive the stock even higher, adds Pete Najarian.

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UNUSUAL ACTIVITY: JPMORGAN

Jon Najarian has spotted some unusual options action in JPMorgan .

A large volume in the March 47.5 – March 50 call spread, suggests to Najarian that somebody is making a big bet to the upside, though he’s not sure what the fundamental catalyst would be.

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FINANCIALS COME BACK AFTER TOUGH WEEK

The financials traded mostly higher on Friday – but not Bank of America after the company posted a fourth quarter loss on more mortgage related write downs and weaker trading revenue.

What’s the trade?

Hear why Jason Trennert of Strategas thinks boutique investment banks such as Evercore and Greenhill are good places to put money to work.

Watch the video now!



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Trader disclosure: On Jan. 21, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Pete Najarian owns (BBY) calls; Pete Najarian owns (F) calls and bonds; Pete Najarian owns (GM) call spreads; Pete Najarian owns (AXP); Pete Najarian owns (V) call spreads; Pete Najarian owns (HPQ) call spreads; Pete Najarian owns (YHOO); Pete Najarian owns (MSFT); Pete Najarian owns (MS); Pete Najarian owns (JPM) call spreads; Pete Najarian owns (C); Pete Najarian owns (BAC) call spreads; Pete Najarian owns (GE); Pete Najarian owns (MCD) call spreads; Pete Najarian owns (GE); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (BWC); Grasso owns (C); Grasso owns (CSCO); Grasso owns (JPM); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST); Grasso owns (S)

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own The Euro
Accounts Managed By Kanundrum Capital Own (DBA)
Accounts Managed By Kanundrum Capital Own (JJG)
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Own (MS)
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (TAN)
Accounts Managed By Kanundrum Capital Own (YGE)
Accounts Managed By Kanundrum Capital Own (SDS)
Accounts Managed By Kanundrum Capital Own (VXX)
Accounts Managed By Kanundrum Capital Own (VIX) calls
Accounts Managed By Kanundrum Capital Are Short The Yen
Accounts Managed By Kanundrum Capital Are Short USD

PATTY EDWARDS
Edwards owns (SPY) for clients
Edwards owns (POT) for clients
Edwards owns (SLB) for clients
Edwards owns (GLD) for clients
Edwards owns (SLV) for clients
Edwards owns (BA) for clients
Edwards owns (AMZN) for clients
Edwards owns (F) for clients
Edwards owns (V) for clients
Edwards owns (JNJ) for clients
Edwards owns (AAPL) for clients
Edwards owns (GOOG) for clients
Edwards owns (ORCL) for clients
Edwards owns (MSFT) for clients
Edwards owns (GS) for clients
Edwards owns (C) for clients
Edwards owns (TGT) for clients
Edwards owns (MCD) for clients
Edwards owns (GE) for clients
Edwards owns (ARW) for clients

STEVE GRASSO
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (ABX)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (NEM)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (S)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own (UAL)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

DENNIS GARTMAN
Funds Managed by Dennis Gartman are short Yen
Funds Managed by Dennis Gartman are short Sterling
Funds Managed by Dennis Gartman are long Gold
Funds Managed by Dennis Gartman are long silver
Funds Managed by Dennis Gartman are long Natural Gas
Funds Managed by Dennis Gartman are long the Swiss Franc
Funds Managed by Dennis Gartman are short the Euro

JASON TRENNERT
Trennert Owns (EVR)

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CNBC.com with wires.

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