Tuesday, August 18, 2009

Saut's Call For This Week: "Caution Please?!"

Jeffrey Saut, the legendary investment strategist at Raymond James, has a missive this week as follows (written yesterday):

As we said in last Tuesday’s verbal strategy comments before leaving for a road trip, “If past is prelude something BIG will happen in the equity markets during our sojourn.” Accordingly, the next day the equity markets rallied sharply, only to give back much of that on Friday’s shockingly bad consumer sentiment figures. And this morning Friday’s Fade continues as world markets worry about the durability of the economic recovery. As one particularly bright money manager notes:

“In studying the charts I noticed the MACD on the daily chart of the Dow has crossed to the downside for the first time since the rally off the July low. This is another sign the rally is running out of steam. The support, short-term, is the 9200 area and if broken then a more substantial decline could get underway. One of my indicators on the daily chart, however, hints that this decline will be shallow and we will see a final surge over the next few weeks to the 9700 – 10,100 area. The ability of the market to continue to rally with volume continuing to decline does not mean it cannot go higher short term, but tells me that the calls for a new Bull Market are certainly suspect. If I am correct, the current pullback will only last until options expiration starts this week then the final rally will begin. Watch the 9200 area for clues for the market direction over the next few weeks.”

Watch out!

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