'Run for cover' if you’re short on markets: Gartman

Global stock markets looked set to build on this week's rally on Wednesday, with Japanese, South Korean and Hong Kong indexes posting strong gains overnight.

Closely followed market-watcher Dennis Gartman, the founder and publisher of the Gartman Letter, told CNBC on Wednesday the early week's market gains could continue for the next couple of weeks.

U.S. stock indexes posted their best day since March on Tuesday with gains of more than 1 percent, following a rise in crude oil prices and encouraging reports on the housing market.

"Historically when that happens, we carry through. So I think you're likely to trade better — maybe not today, particularly — but I bet by Friday we're higher and I bet by next week we're higher again," Gartman told CNBC in London.

"Anybody who's short — and there are a lot of smart people who are in fact heavily short — they have to run for cover, and I think it could get ugly," he added.

S&P 500

The Euro STOXX 50 index, which tracks the biggest euro zone companies, rallied by around 2.8 percent on Tuesday, despite declining at the start of the session.

Gartman told CNBC he reversed his short and turned long on the Euro STOXX 50 following Tuesday's rally. Shorting the market involves the sale of a security motivated by the belief that its price will decline. A long position is when a security is bought on the assumption the asset price will rise.

"When the Euro STOXX 50 reversed to the upside, after having opened lower and then gotten higher on the day, I said to myself, 'this is turning better, something's taking place,'" Gartman told CNBC.

"Perhaps it was the agreement that was reached between the EU (European Union) fiscal authorities and Greece… that seemed to me to be the turning point and once you got higher on the day, it's as if the shorts, I being included, had to rush to get long and I actually ended the day long here, which is unusual for me to turn my position that quickly," he said.

Hopes rose on Tuesday for a new Greek aid package and early on Wednesday, euro zone finance ministers agreed a $11.42 billion deal early to help Athens.

Not everyone shares the same view as Gartman, however, with one analyst warning Wednesday of a possible leg down for U.S. markets.

"We have finally broken out of the range and despite some technical signals to the contrary, the move has been to the upside," Brenda Kelly, the head analyst at London Capital Group, said in a note.

"Yesterday's surprisingly good new home sales data out of the U.S. was something of a catalyst – but I would not rule out this being a temporary squeeze before the next leg down for U.S. indices."

The other big news on Tuesday was Monsanto rejecting Bayer's $62 billion bid, saying it was too low. It indicated it was still open to a deal, however.

Gartman concurred that $122 per share was too low for the U.S. company.

"I agree with Monsanto. I think they're worth at least $130 a share and my guess is that they will get that sort of number before too long," Gartman told CNBC.

"Why is Monsanto worth that much? It's an amazing company, it has led the world in GMO (genetically modified organisms) seeds… I think eventually they'll get their price," he added.

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