Saut: Keep Your Eyes On The Russell 2000...

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:

I am leaving for Europe this coming Friday to see institutional accounts and do some seminars. Consequently, while I will continue to do verbal comments for the balance of this week, there will be no Monday letter for the next two weeks. Hopefully, I will have some insights from my travels upon returning. Nevertheless, last week felt like a trend change to me with the S&P 500 (equal weighted) losing more than 8%, the Russell 2000 surrendering some 7%, and the D-J Transports shedding nearly 9%. Moreover, Thursday was a 90% Downside Day. As the Lowry’s service notes, “A likely key factor in determining the extent of a market pullback in the weeks ahead would be the occurrence of additional 90% Down Days. Thus far, in the rally since mid March, 90% Down Days have been isolated events, quickly followed by a renewed uptrend. However, a series of 90% Down Days could indicate the sort of sustained, heavy selling consistent with a deeper and more sustained market set back.” And, as the always insightful Helene Meisler writes, “Keep your eyes on the Russell 2000 since it is the only index that has rallied back to the underside (or just about) of its broken channel line. A failure here would confirm my view that we’re in the midst of a correction.”

Click on chart to enlarge, courtesy of Raymond James.

Watch out Russell 2000 at StockCharts.com!