With one negative development after another roiling Europe, why isn’t the euro dropping like a lead balloon?
”It won’t break 134, it won’t go down much under 134,” notes strategic investor Dennis Gartman, who had been short.
Considering the fundamentals, Gartman was convicned the euro should be trading at 125 currently – and on its way to parity with the dollar.
But that’s no happening.
And because it’s not happening, Dennis Gartman has had to re-think his position. For the time being, he now says the trade is long.
”It’s the oldest rule in the book. If the news is bearish and market won’t falter you probably have to go to the other side,” Gartman says.
Gartman has a thesis for why the euro doesn’t decline more.
”I can’t help but wonder if money is being repatriated to Europe to take care of the banking circumstances,” he says. “I suspect what’s happening is rather like what happened in the yen when money flowed back to Japan after the problems in Fukushima.”
Although in the long-term, Gartman thinks the financial woes will catch up with the currency – in the near-term Gartman expects gains. “I’m positioned long for a pop,” he says.