Dennis Gartman: Oil Not Likely to Snuff Out Rally

Have we seen the turning point where commodities go from fueling this stock rally to snuffing it out?

That’s the chatter on the Street after the S&P 500 struggled to advance on Monday despite M&A and other signs of strength in the economy.

Again rising oil landed in the spotlight with crude prices hitting their highest levels since 2008. Brent crude surged above $121 intra-day snapping above its month-long trading range.

Are commodities becoming too much of a headwind for stocks?

Strategic investor Dennis Gartman doesn’t think so. He says as long as oil climbs slowly and methodically, he expects the stock market will continue to gain.

”One day we’ll wake up and everyone will say oil is too high but right now the trend is oil keeps making new highs and the market climbs. If we rush up $20 dollars that's a whole other story, but I think we can accommodate another $3, $4 or even $5 in crude."

That’s largely because Gartman takes gains in oil as a sign of increasing global demand. “Oil is telling us a story of global economic strength – particularly in China,” he says.

And Gartman sees that dynamic at play in other commodities too.

As an example, Gartman points to China paying a premium to farmer's who grow cotton, which he also takes as a sign of growing demand. “I guess they are so concerned about how strong demand has been they want to insure that farmers can meet mill demand.”

Although higher oil and higher cotton will probably translate into higher prices for consumers, Gartman isn't worried about an economic slowdown. It’s all signs of improvement, “It means global demand is there, that it's very strong,” says Gartman.

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Trader disclosure: On April 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AA); Seymour owns (AAPL); Seymour owns (CSCO); Seymour owns (F); Seymour owns (GE); Seymour owns (MOS); Seymour owns (SBUX); Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (INTC); Adami owns (MSFT); Adami owns (NVC); Adami owns (BTU); Terranova owns (C); Terranova owns (JPM); Terranova owns (UPL); Terranova owns (PBR); Terranova owns (TCK); Terranova owns (CNQ); Terranova owns (CVI); Terranova owns (AKAM); Terranova owns (XOM); Terranova owns (BAX); Terranova owns (VRTS); Finerman and Finerman's Firm own (AAPL); FInerman's firm owns (BMW); Finerman and Finerman's Firm own (CMI); Finerman and Finerman's Firm own (BP); Finerman's Firm owns (GM); Finerman owns (GOOG); Finerman's Firm owns (JPM) and (JPM) leaps; Finerman owns (JPM); Finerman and Finerman's firm owns (MSFT); Finerman owns (RIMM); Finerman's firm is short (IJR); Finerman's firm is short (IWM); Finerman's firm is short (SPX); Finerman's firm is short (XRT); Finerman's firm is long S&P 500 puts; Finerman's firm is long RUssell 2000 puts; Finerman's Firm Owns BMW

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