Saut: We Are Pretty Cautious ...

Jeff Saut, the respectful strategist at Raymond James has posted his weekly missive, see the latest version here. Last time on this blog Jeff suggested this.
His call for this week (but read the full story) in very short:

Last week the D-J Transportation Average (TRAN/3137.76) rallied to a new reaction high. Unfortunately, the D-J Industrial Average (INDU/8076.26) did not. Whether this upside non-confirmation is meaningful remains to be seen, but at session 35 in the upside skein we are pretty cautious. Moreover, as the astute Dines Letter observes, “April has been a month with a pivotal reversal of the March trend 67% of the time since 1963; and, at least a semi-important Top has been reached in virtually every April or May since then.” Consequently, while we don’t think the old stock market “saw” of “sell in May and go away” is going to play in 2009, we do believe the trick from here is harvesting trading profits and hedging some of your investment positions using various option strategies. As for that piece of bad news that comes out of nowhere, which breaks the back of the buying stampede, that we have been warning about. Well, we may have just gotten it – swine flu.

Consider as a probability!