Dennis Gartman: The Commodities Game Has Changed, Advantage Bulls

Appetite for risk increased on Monday as optimism prevailed on Wall Street.

But are gains in commodities a one-day event?

According to strategic investor Dennis Gartman – nope. He tells us the game changed on Monday.

Gartman points to two factors.

1. Caterpillar

Caterpillar far exceeded analyst expectations Monday, reporting a 44 percent quarterly earnings increase and record revenue.

Not only were results bullish but the CEO did not signal caution about the next quarter.

“Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point,” said Chief Executive Officer Doug Oberhelman in the statement.

Looking at the numbers, Caterpillar said full-year profit will be $6.75 a share and sales will be at the top end of a previously forecast range of $56 billion to $58 billion.

"That Caterpillar results really were quite extraordinary," Gartman says.

2. China

The latest economic data out of China shows that nation's vast manufacturing sector expanded moderately in October.

”The PMI is the highest since May and it shows expansion when the past three numbers have shown contraction,” explains Tim Seymour.

"That PMI was an important number," adds Gartman.

These data points suggest that it’s is now much more likely that recession has been averted and the global economy is growing, explains Gartman.

”And if that’s the case, then buy the stuff that hurts when you drop it on your foot!”

Gartman concedes that this is a change. "If you asked me only a month ago, I would have told you the global economy was in danger. But this has changed my opinion completely. When the facts change, I change."

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Trader disclosure: On Oct 24, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Nathan has long Jan. puts BAC; Nathan has long Oct. puts GS; Nathan has long Jan. puts MS; Nathan has long Oct. put butterfly NFLX; Terranova owns IBM; Terranova owns AAPL; Terranova owns AXP; Terranova owns CAT; Terranova owns F; Terranova owns GS; Terranova owns OXY; Terranova owns FCX; Terranova owns LQD; Terranova owns MUB; Seymour is long BAC; Seymour is long INTC; Seymour is long FCX; Brown is long RAX; Nations is long SPY

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I, Michael Pachter, certify that the views expressed in this report accurately reflect my personal opinion and that I have not and will not, directly or indirectly, receive compensation or other payments in connection with my specific recommendations or views contained in this report.

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