All this week on Fast Money, we've been inviting the Street's best technicians to chart their best trades. On Thursday hear from strategic investor, Dennis Gartman.
Gartman is also the author of The Gartman Letter and he joins the panel for this conversation.
What do the charts tell you about interest rates?
“If you fight the Fed they’re going to take you down,” says Gartman. “They cut rates aggressively 2 weeks ago and they’re not going to pay any attention to inflation. They made it abundantly clear they’re going to ease. Now who’s the beneficiary of that? Regional banks because they’re going to earn several hundred basis points of positive return. “
He adds, “This is a completely different Federal Reserve (than under Greenspan). It’s a Fed that’s going to respond far more in advance than previous Feds….They’re going to be proactive. We have to get use to that. This is a different Bernanke Fed and I think that’s going to take time for investors to understand."
How do you play that?
Looking at small banks in you home town; banks such as Indiana’s Towne Bank (TOWN).
What do the charts tell you about oil?
“This market continues to want to go higher,” says Gartman. “It is being driven by demand. The “backwardation” of the front months continue to expand out over the back months and that shows a strong demand.”
He adds, “I’m long companies that go in and drill for oil.”
And gold?
“This chart is going from the lower left to the upper right,” says Gartman. “Combined with a Fed that has told us they’re no longer inclined to be as concerned about inflation as they had been in the past, that says to me (investors should) own gold."
He adds, “Is the (price) going higher dramatically? Is it going to $1,000 an ounce by the end of the year? No. But it’s likely going higher."
But gold can take the elevator down? Why is it different this time?
“Because it’s a different Fed," replies Gartman. “I think we have large banks in China, India and Burma taking a look at their positions. They own a lot of dollars and euros and very little gold… I have to think they will be quiet buyers to swap out of dollars and euros.”
What position do you currently hold that you are most confident in?
“Owning wheat,” answers Gartman. “People have to eat and people eat wheat. Look at the wheat chart. It goes from lower left to upper right.”
And how do you play it?
“Market Vectors ETF (MOO) is a new ETF, although it’s not entirely focused on wheat,” explains Gartman. “There’s also a pure wheat ETF that trades in England.”
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Trader disclosure: On Sept. 27, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Najarian Owns (DISH), (NAT), (UA); Finerman's Firm Owns (BEAS), (NYX), (NMX), (PSS), (WMT), (TXI); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns (MSFT) Options
Gartman Owns (AAPL), (FTK), (PBR);Gartman Owns Gold; Gartman Is Short (CFC); CIBC Gartman Index Owns Wheat; Soybeans, Corn, Gold, Crude Oil; CIBC Gartman Index Owns The EUR
