Traders often say they don’t sound a bell at the top, but if Dennis Gartman could, he’d be up in the belfry right now.
Gartman, who is a widely followed commodity trader and CNBC contributor, thinks signs are emerging that suggest the commodity bull is running out of gas.
He's first points to plans by Glencore, the world’s largest commodity house, to raise as much as $11 billion in an IPO scheduled to price this week.
In case you're not familiar with Glenncore, headquartered in Switzerland, the firm produces, sources, processes, refines, transports, stores, and finances commodities all around the world, according to its website.
“Glencore could have gone public almost anytime and it has chosen to go public right now,” says Gartman. “I think one has to be very careful being bullish of commodities when Glencore is cashing out. These are among the smartest people in the world.”
"If Glencore is getting out, one should be somewhat suspect," Gartman adds
Of course there’s another way to look at the IPO. “You can make the argument they’re trying to get more capital with which to do a bigger number of trades,” admits Gartman. And that would be a bullish commodities.
But Gartman sees some other negative signs looming. “Wheat isn't making new highs – cotton is down 30% from its highs and copper is breaking down under $4,” he says.
In other words, when taken alone the Glencore IPO may not be a sign of the top. But look at it in the context of other bearish catalysts and the path of least resistance is probably lower. “Some of the bloom is off this rose,” Gartman says.
And in case you're wondering, it's not just Dennis Gartman who's turning somewhat negative on commodities. Last week Mark Fisher of MBF made a similar call. "The IPO overseas of Glencore bothers me. When the biggest trader in the world IPO's themselves," pay heed.
What do you think? We want to know!
* CNBC's Catherine Holahan contributed to this report.
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Trader disclosure: On May 16, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is short (X). Stephen Weiss owns (DVN), (COP), (QCOM), (BRCM), (TEVA), (KO), (RIG), (HK), (AKAM), (UUP), (DE), (UAL), (MRK), (HBAN), (KEY) and (JPM); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (JPM); Terranova owns (V); Terranova owns (BX); Terranova owns (UPL); Terranova owns (BAX); Terranova owns (PFE); Terranova owns (PEP); Terranova owns (MCD); Terranova owns (TM); Terranova owns (DIS); Terranova owns (BJ); Terranova owns (APA); Terranova owns (OXY); Terranova owns (XOM); Adami owns (AGU); Adami owns (C); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Karabell owns (RIMM); Karabell owns (SLV); Karabell owns (AAPL); Karabell owns (GE); Karabell owns (GOOG)
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