The most important chart in the market right now could be rather disturbing to equity investors, according to commodities king Dennis Gartman.
On Thursday, the Gartman Letter editor and founder joined Bloomberg "Futures Now" to point out something in the market that he believes has been overlooked: That stocks are now overvalued, and commodities are undervalued.
"We are at a level where commodities are unbelievably inexpensive relative to the S&P 500, levels we have not seen since the peak of equities prices in the dotcom era [and in] 1971," he said. "The broad commodity indexes have all made their lows, and yet deflation seems to be the talk of the day, rather than inflation."
Commodities posted their worst first half of the year since 2010 as the Goldman Sachs Commodities Index has hit its lowest point against the S&P 500 in years. For Gartman, this is suggesting that investors should sell stocks and start piling into commodities.
In fact, he says many commodities seem to be bouncing off their lows. Crude is now more than 8 percent up from its year-to-date low, and many of the soft ags have also surged in 2017.
Given this, Gartman suggests that if there is "one commodity above the rest" that investors should buy, corn would be it thanks to the weather market benefiting the crop.
Bloomberg Pro Terminal
Trader Velizar Mitov
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.