Tags: Gartman | Dollar | Stock | Correction

Gartman: Dollar Rise May Trigger Big Stock Drop

Thursday, 28 Jan 2010 11:03 AM

With the dollar’s strength increasing, investors should be wary of the market correcting itself, says Dennis Gartman, founder of The Gartman Letter.

Stocks could easily tank, he said.

“You should be aware of the fact that a correction is probably setting in (and) that this could be a bit more than a two or three percent correction, that perhaps something along the lines of five to ten percent is upon us, and I think you need to be very, very careful," Gartman told CNBC.

Investors expecting more good news to arise from the earnings season will likely be disappointed, he said.

“All of the good news, all of the anticipation of good news, probably is incumbent in prices already, and the ability to be surprised to the upside as far as earnings are concerned, I think, is relatively limited," he said.

When companies report their earnings this quarter, investors should not expect any upbeat expectations, Gartman said.

“I think there will be some disappointment rather than some surprises to the upside," he said.

The market is not reacting to economic data for now, Gartman said.

“Everybody is aware of the fact that the recession ended long ago. Everybody is well aware of the fact that productivity numbers have been much better than expected,” he said.

The Federal Reserve is not likely to raise interest rates soon, Gartman said.

“They'll keep short rates as low as they can, as long as they can, and probably longer than anybody anticipates,” he said.

U.S. stocks are also being affected by the dollar and China’s changes, the Wall Street Journal reported.

“With the dollar reversing to the upside and China taking its foot off the monetary accelerator, we think a major pullback has begun," said Mark Arbeter, chief technical strategist at Standard & Poor's.

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With the dollar s strength increasing, investors should be wary of the market correcting itself, says Dennis Gartman, founder of The Gartman Letter. Stocks could easily tank, he said. You should be aware of the fact that a correction is probably setting in (and) that...
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Thursday, 28 Jan 2010 11:03 AM
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