Saut: What Shape Recession...

Jeff Saut, the respectful strategist at Raymond James has posted his weekly missive, see the latest version here. Last week Jeff suggested this.

His call for this week (but read the full missive):

While many pundits argue “Dow Theory” has become an irrelevant indicator (see Barron’s Online article “Be Leery of Dow Theory” dated 2/19/09), it did indeed give participants a “sell signal” in November 2007. Regrettably, it reconfirmed that “sell signal” last week. Interestingly, however, despite the Desultory Dow the S&P 500 continues to reside above its November 2008 “lows.” Still, other than precious metals, not much is working on the “long side” year-to-date.” Verily, of all the indices we track the NASDAQ 100 is performing the best with negative returns of a -3.2% YTD, while the D-J Transports are the worst performing at -23.7%. In fact, in my universe, in addition to the precious metals, only Coffee (+2.65%), Sugar (+7.22%), Copper (+8.55%), Lead (+7.01%), Tin (+4.30%), and the U.S. Dollar Index (+6.50%) are showing positive returns year-to-date. Consequently, while we would like to be as positive as our portfolio manager friend, we need to see more technical evidence that last week’s breakdown is a false breakdown before committing more capital to stocks. We do, however, still like the strategy of accumulating distressed debt; and one of the vehicles we are using is Lord Abbett Bond Debenture Fund (LBNDX/$5.94).

Consider as a probability!