More by the Same Author
2014-12-16 Please Make it Stop! by Jeffrey Saut of Raymond James
He said: “Jeff, you sure were right in Thursday morning’s verbal strategy comments when you said we should get a bounce following Wednesday’s 90% Downside Day, but that that bounce should not hold and for the perfect set-up to occur for the Santa Rally would be to have the S&P 500 come back down and travel into the 2000 – 2010 level.”
2014-12-11 Quote of the Week by Jeffrey Saut of Raymond James
As most of you know I was in New York City most of last week seeing institutional accounts, doing media and speaking at various events. One of the media appearances was to co-host CNBC’s “Closing Bell” on Tuesday, with the sagacious Sara Eisen, who unsurprisingly gave me the quote of the week. The quote was, “Think of it this way, lower oil prices are to America what lower labor costs were to the BRICs!”
2014-12-05 2015? by Jeffrey Saut of Raymond James
Year-end letters are always difficult to write because there is a tendency to discuss the year gone by, or worse, try and predict what is going to happen in the New Year. I mean really, at this time last year who predicted Russia would invade Crimea, that ISIS would effectively take over a significant portion of Iraq, or the Republicans would sweep Congress.
2014-11-25 Thanksgiving Recipe by Jeffrey Saut of Raymond James
Begin with a turkey “chilling” in a sink for a few hours. Mix in the Bank of Japan’s “shock and awe” announcement of a week ago. Add the U.S. unemployment claims that are at a 14-year low and stir well, include housing prices that are better by +6%, fold in the Leading Economic Indicators advancing by 7%, the ECB announcement by Draghi about a “bazooka” of Quantitative Easing (QE), and the Thanksgiving dinner result . . . new highs for equity prices!
2014-11-19 Crude Oil? by Jeffrey Saut of Raymond James
“Integrity,” Webster’s dictionary defines it as, “The quality of being honest and having strong moral principles.” Recently the voters of America sent the D.C. crowd a message that they want “integrity” back in government. Consequently, I viewed the midterm election as a “turning point.” And, a turning point approaches on December 21st of this year. That’s when the Winter Solstice arrives.
2014-11-13 Dash Dash...Dot Dot by Jeffrey Saut of Raymond James
“Dash, Dash ... Dot, Dot” is all about Morse Code where the “dash” is three times the duration of the “dot.” According to Wikipedia, “Each character (letter or numeral) is represented by a unique sequence of dots and dashes. Each dot or dash is followed by a short silence, equal to the dot duration.
2014-10-30 The Week That Was by Jeffrey Saut of Raymond James
In the June 26th edition of the Morning Tack, Jeff Saut wrote, “I do believe the VIX bottomed last Friday (6/20/14) with an undercut low, much like the undercut low of October 4, 2011 that we identified as the ‘valuation low,’ and recommended should be bought with the SPX trading back then at 1075.” Well that proved to be fitting timing, since from that 6/20 low to the high on Wednesday 10/15, all the VIX did was shoot up about 200%!
2014-10-23 No More Black Mondays by Jeffrey Saut of Raymond James
In a true demonstration of impeccable and apropos timing given the recent volatility we have experienced, yesterday marked the 27th anniversary of one of the stock market’s most infamous and chronicled events. Black” Monday, October 19, 1987 was one of those multiple standard deviation occurrences that statisticians will tell you are not supposed to ever really happen, but as is the case more frequently than most realize, it of course did happen, and its impact is still being felt today even as there are fewer and fewer investors around that actually had to suffer through it.
2014-10-16 The Right Question by Jeffrey Saut of Raymond James
In this business it has been said, “Sometimes knowing the right question is more important than actually knowing the answer.” Over the years I have found that old Wall Street axiom to serve me well. One example would be reading the footnotes in a company’s annual report.
2014-10-10 That Was the Week That Was... by Jeffrey Saut of Raymond James
A week ago yesterday I arrived in New York City just in time to have dinner with some friends. Avra Estiatorio is arguably the best Greek seafood restaurant in the city and it is located 20 steps from my hotel of choice, the Hyatt 48 lex, which is aptly named since it sits on the corner of Lexington and 48th street.
2014-10-01 Myths: Past, Present, and Future by Jeffrey Saut of Raymond James
“If you don’t change your indicators for the changing causal relationships you are doomed!”
2014-09-23 Sisyphus Succeeds! by Jeffrey Saut of Raymond James
I have been reminded of the Greek mythology character Sisyphus since mid-July as investors tried to “roll an immense boulder up a hill, only to watch it roll back down.” In this case the “boulder” in question has been the D-J Industrial Average (INDU/ 17279.74), which since late July has tried seven times to better its all-time high of 17138.20 made on July 16th of this year.
2014-09-18 Then and Now by Jeffrey Saut of Raymond James
Dallas-based Greenbrier Partners is captained by my friend Frederick E. Rowe, who is fondly referred to as Shad. Now anyone from Virginia is familiar with the fish known as a shad, and are probably familiar with the political event known as the Shad Planking.
2014-09-11 Calm Down 2 by Jeffrey Saut of Raymond James
In last Friday’s Morning Tack I referenced some sage advice from the legendary Dow Theorist Richard Russell of Dow Theory Letters fame.
2014-08-21 Lucid Dreaming! by Jeffrey Saut of Raymond James
Evidentially, the “lucid dreamers” on Wall Street practiced their skills two weeks ago as professional traders were sneaking large “buy orders” into the equity markets on the closing bell. Simultaneously, the Commitment of Traders’ Report showed those same traders were dramatically reducing their “short sale” bets.
2014-08-14 A New York State of Mind by Jeffrey Saut of Raymond James
I met Arthur, as well as a host of other friends, last Thursday afternoon during my NYC sojourn to see institutional accounts and do media events. Over a scotch, he related the aforementioned story to me. The timing was propitious because another one of our friends had just telephoned to tell us the President was authorizing air strikes against ISIS. After a dinner at Mr. Chow’s, I went back to my hotel to find the preopening S&P 500 futures printing down roughly 11 points.
2014-08-05 Always Wrong?! by Jeffrey Saut of Raymond James
s the public always wrong? This is probably the most frequently asked question about the Theory of Contrary Opinion. For a correct answer we need to change the words in the question. Let me put it this way: Is the public wrong all the time? The answer is decidedly, “No.”
2014-07-30 Trains and Boats and Planes? by Jeffrey Saut of Raymond James
hose of you who know me know that I have had a love affair with boats ever since I was a kid. In my youth it was speedboats on various lakes in Michigan. In my teens, and into my forties, it was sailboats combined with an occasional trawler. In later life, however, it has been strictly powerboats.
2014-07-28 How High is High? (To Whom?) by Jeffrey Saut of Raymond James
I have a number of friends who succeeded as investors in the late 1960s, and they are succeeding now. The key to their success more than 20 years ago was that they managed to get out with most of their capital when the market turned down. Most investors were not so astute.
2014-07-18 Fireside Chats by Jeffrey Saut of Raymond James
While I was in the Pacific Northwest and Canada most of last week, I did have the privilege of listening to J.P. Morgan’s (JPM/$55.80/Strong Buy) Chief Market Strategist last Monday. Dr. David Kelly has long been known for his keen insights on the equity markets, with JPM’s senior portfolio managers like George Gatz and Tom Luddy steering their mutual funds, on said strategic views, to outsized gains for many years.
2014-07-09 Making a Market Call by Jeffrey Saut of Raymond James
In last Monday’s strategy report I noted that the week before July 4th has an upward bias for the equity markets. On Tuesday I backed that up by writing, “From 1950 to 2013 the market has delivered positive returns 72% of the time during the last two days of June and the first five days of July.”
2014-06-25 Truth or Consequences? by Jeffrey Saut of Raymond James
I am always trying to manage the “risks” inherent with investing (or trading), for as Benjamin Graham stated, “The essence of investment management is the management of risks, not the management of returns. Well-managed portfolios start with this precept.” And that, ladies and gentlemen, is why I often “wait” on an investment until its share price is at a point where if I am wrong, I will be wrong quickly, and the incidence of “loss” will be small and manageable.
2014-06-18 Bizarro World by Jeffrey Saut of Raymond James
I feel like I am living in Bizarro World. First named "Bizarro World" in DC Comic books, the term has come to mean a situation or setting that is weirdly inverted or opposite of expectations. I mean we’ve had the ATF’s Fast & Furious where we sold guns to Mexican smugglers. The NSA is spying on us. The IRS is using its power to target select groups and now the IRS claims it has lost 28 months of Lois Lerner’s emails. Benghazi. The Department of Justice going after the Associated Press and Rosengate.
2014-06-12 Everybody’s Unhappy?! by Jeffrey Saut of Raymond James
In Last Friday’s Morning Tack I had this to say, “While there are no current major negatives from my indicators, this does indeed feel like the end of a trading move and not the beginning of another huge leg to the upside.” What causes such inflection points is when the folks that have doubted the rally finally can’t stand it any more and they throw in the towel and buy stocks.
2014-06-09 Everybody’s Unhappy?! by Jeffrey Saut of Raymond James
If the equity markets don’t experience a sell-off this week, we can probably assume the SPX is in its final upside “blow-off” stage on a trading basis. In such a stage the markets make it seem unbearable to be in too much cash, or worse, totally out of the market. Blow-offs usually end with a parabolic peak and often with a buying climax. If you want to see what a buying climax looks like, go look at the “selling climax” at the March 2009 lows and turn the chart upside down. Longer-term, I continue to hold the belief we are in a secular bull market, but in the sho
2014-05-20 Computer Tutor?! by Jeffrey Saut of Raymond James
My friend Jerry Goodman died recently. His nom de plume was Adam Smith, obviously taken from the legendary economist Adam Smith (1723 – 1790). In addition to the book The Money Game, Jerry wrote numerous other books. In his later years, he worked at another friend’s establishment, that being Craig Drill, eponymous captain of the insightful Drill Capital Management.
2014-05-16 Old Turkey by Jeffrey Saut of Raymond James
I revisit the “Old Turkey” story this morning, which I first read in the classic book Reminiscences of a Stock Operator, about the escapades of Jesse “the boy plunger” Livermore, because of the reference I made to him last week that drew so many questions. The wisdom of “Old Turkey” is as good today as it was when first published in 1923. The problem with most investors today is that they have never experienced the 1923 – 1929, the 1946 – 1964, or the 1982 – 2000 secular “bull markets.”
2014-05-09 You Gotta Have Heart by Jeffrey Saut of Raymond James
Secretariat (3-30-70 – 10-4-89) is considered the greatest American racehorse of all time. In 1973 he became the first Triple Crown winner in 25 years, and in the process he set records in all three races that still stand today. In the Kentucky Derby his time was 1:59 2/5, in the Preakness it was 1:53, and in the Belmont Stakes 2:24.
2014-05-02 Throw Deep?! by Jeffrey Saut of Raymond James
Back in the late 1980s a newspaperman visiting the Raiders football training camp in California had just returned from the Jack London Historic Monument. He read a sample of London?s prose to the Raiders? colorful quarterback, Ken ?The Snake? Stabler:
2014-04-23 Poker Mentality?! by Jeffrey Saut of Raymond James
have often stated that the rarest trait on Wall Street is ?patience.? I have also repeatedly reprised Charles Dow?s quote that, ?The successful investor/speculator needs to ignore two out of every three potential money making opportunities.?
2014-04-16 The Wile E. Coyote Stock Market? by Jeffrey Saut of Raymond James
Last Wednesday, when the D-J Industrials were up some 180 points, I could not shake the feeling that this was the ?Wile E. Coyote stock market.? The visual is when Wile runs off a cliff, but his feet keep moving, until he looks down and realizes there is nothing underneath him. The resulting fall was similar to what happened late last week to the equity markets. Indeed, I really did not understand, or trust, last Wednesday?s Dow Wow for the reasons mentioned in these missives.
2014-04-10 The Russians Are Coming by Jeffrey Saut of Raymond James
The Russians Are Coming, The Russians Are Coming is a 1966 American comedy film directed by Norman Jewison and based on Nathaniel Benchley?s book The Off-Islanders. The movie tells the Cold War story of the comedic chaos that happens when a Soviet submarine runs aground closely offshore a small island town near New England and the crew is forced to come ashore. Last Friday, however, rumors that the ?Russians are coming? swirled down the canyons of Wall Street, causing a late Friday Fade that left the S&P 500 (SPX/1865.09) down an eye-popping 24 points.
2014-04-03 Being There by Jeffrey Saut of Raymond James
Spring has sprung, yet many market pundits are worried about the softening economic reports, causing me to remember the book ?Being There? by author Jerzy Kosinski.
2014-03-26 Picture This by Jeffrey Saut of Raymond James
Picture this: you?re an investor starting out in the 1940s after World War II came to an end. Your own experience in the contemporary history of the stock market would've taught you that bonds were the safer, and superior, asset allocation over the long-term.
2014-03-19 A Kid?s Market? by Jeffrey Saut of Raymond James
The Great Winfield goes on to say, in Adam Smith?s classic book from 1967, ?The strength of my kids is that they?re too young to remember anything bad, and they are making so much money they feel invincible.? He rented kids with the idea that one day the music will stop (it partially did in 1969-1970 and completely did in 1973-1974) and all of them will be broke but one.
2014-03-03 I?m Confused by Jeffrey Saut of Raymond James
In one of last week?s Morning Tacks I used this email from one of our financial advisors: ?Hey Jeff, about a month ago I emailed you asking if the ~1750 low on the S&P 500 was a good buying opportunity. You emailed back saying ? ?No, not yet? ? and ever since in your remarks you claim not yet. So now that we are well above that level, clients are asking why didn?t we get in ... what?s your recommendation??
2014-02-26 The White Hurricane by Jeffrey Saut of Raymond James
'Unseasonably mild and clearing' was the weather forecast going into the Ides of March back in the year of 1888. And it was true, as temperatures hovered in the 40s and 50s along the East Coast. However, torrential rains began falling, and on March 12th, the rain changed to heavy snow, temperatures plunged, and sustained winds of more than 50 miles per hour blew.
2014-01-29 Bear Raid? by Jeffrey Saut of Raymond James
I should have guessed that something was wrong when I checked into the Langham Hotel last Thursday only to be told by the valet, "There is a bear on the loose in the neighborhood so watch out." At first I didn’t believe him, but when I turned the TV on there it was, and as the cameras rolled the news anchor said, "Pasadena police and wildlife officials are warning residents to be on alert for a black bear after it was spotted wandering through backyards. The animal appears to be moving from home to home."
2014-01-24 The Week by Jeffrey Saut of Raymond James
Arguably, the best magazine of recent times has been The Week, a publication that embraces magazine journalism in its most functional style. The Week is written in one-hundred synopses culled, for the most part, from other news organizations from around the world on all topics. If I had but one publication to read in order to stay informed on just about everything, it would be The Week. In this morning’s missive, however, I am referring to "the week" I experienced last week in South Florida.
2014-01-15 The January Barometer by Jeffrey Saut of Raymond James
It’s that time of year again when the media is abuzz with that old stock market saying, "so goes the first week of the new year, so goes the month and so goes the year." Admittedly the January Barometer has a pretty good track record.
2014-01-08 I'm Back by Jeffrey Saut of Raymond James
Well, I’m back after roughly a two-week hiatus where I didn’t do very many strategy calls, or strategy reports. I did, however, pen a letter regarding my forecast for 2014 dated 12/30/13. And for those who, like me, kicked back over the past two weeks to spend time with family and rejoice in the holidays, and did not read anything, I urge you to peruse my "2014" report.
2013-12-31 2014? by Jeffrey Saut of Raymond James
Year-end letters are difficult to write because there is always a tendency to discuss the year gone by or, worse, attempt to forecast the coming year. Typically, when the media asks where the S&P 500 (SPX/1841.40) will be at the end of the new year, I tell them you might as well flip a lucky penny.
2013-12-17 The One Percent by Jeffrey Saut of Raymond James
I read the Pope’s words about inequality following a meeting of our newly formed Consumer Analysts Panel. The panel consists of our consumer analysts, our lodging/housing analysts, our economist, senior management of our institutional sales team, and me. Interestingly, the recurring theme over the course of said meeting was that the top 20% of wage earners are doing fine, but the bottom 20% are not.
2013-12-10 Christmas by Jeffrey Saut of Raymond James
Well it is official, Christmas has begun. For me it began with the private wine and dinner party at Morrell, arguably the finest wine store I have ever seen, and anyone that knows me knows I have seen a lot of wine stores! Morrell is located at 1 Rockefeller Center between 5th Avenue and 6th Avenue overlooking the Christmas tree at Rockefeller Center. I had done a gig on Bloomberg radio at Morrell last Tuesday with my friends Carol Massar and Pimm Fox and got invited to the party the next evening to watch the lighting of the Christmas tree.
2013-12-05 Running Out of Time by Jeffrey Saut of Raymond James
Well, so far the Federal Reserve is winning out over my timing models that continue to suggest caution should be the preferred strategy in the short-term; and last week that strategy was wrong footed as the D-J Industrial Average notched another new all-time high.
2013-11-25 Sir Isaac Newton by Jeffrey Saut of Raymond James
In 1711 the Earl of Oxford formed the South Sea Company, which was approved as a joint-stock company via an act by the British government. The company was designed to improve the British government’s finances. The earl granted the merchants associated with the company the sole rights to trade in the South Seas (the east coast of Latin America). From the start the new company was expected to achieve huge profits given the believed inexhaustible gold and silver mines of the region.
2013-11-20 Who is Right on the Stock Market? by Jeffrey Saut of Raymond James
Efficient, or inefficient, that is the key question. I would argue that at major inflection points the stock market is ANYTHING but efficient. That’s because, as my dear, departed father used to say, “The stock market is fear, hope, and greed only loosely connected to the business cycle!” Plainly, I agree and would note that when on March 2, 2009 I stated the stock market was going to bottom that week, I was greeted with cat-calls of disbelief. The same was true with the Dow Theory “sell signal” calls of September 1999 and November 2007.
2013-11-11 That Was the Week That Was?! by Jeffrey Saut of Raymond James
That Was the Week That Was, informally TWTWTW or TW3, was a satirical comedy program on BBC television in 1962 and 1963. It was devised, produced, and directed by Ned Sherrin and presented by David Frost. An American version by the same name aired on NBC from 1964 to 1965, also featuring David Frost. And last week was just such a week for me.
2013-11-06 Permabull? by Jeffrey Saut of Raymond James
A permabull is defined as somebody who is always upbeat about the future direction of the stock market and the economy. Recently I have been called a permabull by certain members of the media, which may be true since March of 2009, but certainly not true over the past 14 years.
2013-10-28 A Different Perspective by Jeffrey Saut of Raymond James
In last Tuesday’s Wall Street Journal there was a story titled “No Rocket? Venture to Sell Balloon Trip Into Space.” The article began, “Space tourism may not be rocket science after all. An Arizona company wants to develop high-altitude balloons to send thrill seekers to the edge of Earth’s atmosphere. The trips would cost less than other proposed space jaunts, but passengers wouldn’t experience the same intensity of weightlessness.”
2013-10-22 The Boys Are Back in Town by Jeffrey Saut of Raymond James
The boys are indeed back in town as Washington D.C. opened its doors for business as usual last week following a contentious debt ceiling debate and a 16-day shutdown of the government. This outcome had been anticipated in these letters for often-stated reasons, and just like when the ”fiscal cliff” was averted, I now expect the media to turn its focus to the next Armageddon.
2013-10-17 Huey Lewis and the News! by Jeffrey Saut of Raymond James
Thirty years ago Huey Lewis and the News released their smash hit album titled Sports. It was an instant hit with every song on the album a winner. And last week Huey was playing on the Street of Dreams as participants danced to his hit tune “This Is It.” Of course, the “It” in question is a potential deal between the House of Representatives and the President on the debt ceiling and the government shutdown.
2013-10-09 Ashes to Ashes by Jeffrey Saut of Raymond James
The phrase “ashes to ashes, dust to dust” is derived from the Biblical text of Genesis 3:19 and was adapted to its present form at an old English burial service. Last week I repeated those words as I scattered my father’s ashes next to my mother’s in the memorial garden of the church they loved so much in Richmond, Virginia. Indeed, my week was spent in Richmond, Washington D.C., and Baltimore seeing institutional accounts, consulting with political types, and speaking at various events for our financial advisors and their clients.
2013-09-25 Thank You! by Jeffrey Saut of Raymond James
Thank you Franklin Templeton for allowing me to speak at your world headquarters in San Mateo, California last week. I had the privilege of meeting John Templeton on a number of occasions and it is heartwarming to see your organization carrying on with Sir John’s impeccable traditions. Thanks to all the portfolio managers (PMs) that met with me in the San Francisco Bay area, as we swapped ideas and renewed friendships.
2013-09-18 White Noise by Jeffrey Saut of Raymond James
Most recently, I have been in a cautious mode, believing we were involved in a short-term pullback that would carry the S&P 500 (SPX/1687.99) down about 10%. That strategy was working until the Syrian compromise wrecked the rhythm of the decline. Bear in mind, however, the anticipated decline was always couched within the context of a longer-term secular bull market.
2013-09-10 The Suit? by Jeffrey Saut of Raymond James
Bernie Cornfeld, of IOS Fund fame, coined the phrase, “Do you really want to be rich?” At the time I was working as a stock broker, and writing investment strategy for E.F.Hutton, having penned in December 1974 that, “I recommend a gradual return to significant common stock accumulation” (I still have that report). I also learned that you have to evaluate the risks, because sometimes when you go after the “big bucks” you lose. Then you end up with small change!
2013-09-04 Money and Savings? by Jeffrey Saut of Raymond James
I spoke to Ben Stein (American actor, writer, lawyer, and commentator on political and economic issues) a few weeks ago, and his parents sound a lot like my grandparents. My grandparents, and their peers, were just starting out in life during the depression. After experiencing those horrible economic times, saving for a rainy day became second nature.
2013-08-28 Random Thoughts in the Summer Doldrums by Jeffrey Saut of Raymond James
On October 10, 2008, with the S&P 500 (SPX/1663.50) at 839.80, the bottoming process began when 92.6% of all stocks traded on the NYSE made new annual lows. That’s a six standard deviation event, which is supposed to occur only twice in a lifetime. At the time many investors were liquidating their portfolios because they did not heed Benjamin Graham’s advice in his epic book The Intelligent Investor, “The essence of investment management is the management of RISKS, not the management of RETURNS.
2013-08-19 Temptress Time?! by Jeffrey Saut of Raymond James
I don’t equate gambling with investing, but many do by using margin, options, exotic derivatives, and what-have-you to leverage their various market positions. To be sure, some seers say that the public has been buying 2 to 1, and even 3 to 1, leveraged exchange-traded funds (ETFs) on 50% margin, which gives those positions 4:1 and 6:1 leverage, in an attempt to try and outperform the S&P 500. When leverage works in your favor, it can multiply profits enormously.
2013-08-13 Dog Days! by Jeffrey Saut of Raymond James
The phrase “Dog Days” refers to the sultry days of summer. In the Northern Hemisphere, the Dog Days of summer are most commonly experienced in the months of July and August, which typically experience the warmest summer temperatures of the year. In the Southern Hemispheres, they tend to occur in January and February, in the midst of the austral summer. “Dog Days” is also defined as “stagnation,” so I think “Dog Days” is the proper moniker for last week’s market action as all the markets stagnated!
2013-07-31 Bad Trade?! by Jeffrey Saut of Raymond James
Last week I asked myself the obligatory question, “Did I make a bad trading decision by targeting mid-July through mid-August (with the date specific of July 19th) as the timing point for the first meaningful decline of the year?” The reason for said question was that every time the S&P 500 (SPX/1691.65) sold off last week, buyers showed up to save the day. And, the operative word is “trading” because that potential downside strategy was merely a short-term tactical call.
2013-07-24 D-Day +1 by Jeffrey Saut of Raymond James
I have termed last Friday (7/19/13) as D-Day because for the past few months my work has targeted that date as a potential turning point for the equity markets. Given the upside stampede, my sense was/is that “turn” would be to the downside for the first meaningful pullback of the year. In past missives I have elaborated on the reasons and clearly the media has “listened.”
2013-07-16 The Philosophy of Tops by Jeffrey Saut of Raymond James
“Everyone kept saying a top is not in place yet.’ They persistently pointed to the normally reached’ levels of this or that statistic that were not yet there to reinforce their desire to remain bullish...I have used this quote from Justin Mamis (historian, author, and stock market guru), many times during the years. I use it again this week since we have arrived at my major timing point of July 19th, which for months I have suggested represents the best potential for the first meaningful decline of the year.
2013-07-09 Rosebud?! by Jeffrey Saut of Raymond James
Produced in 1941, the movie “Citizen Kane” is heralded as one of the best movies ever made. It was one of the first to depict the American Dream, and materialism, as less than desirable and therefore causes one to contemplate what actually constitutes “a life?” Indeed, as a child the central character, Charles Foster Kane, is living in rural Colorado in a boarding house run by his mother (Mary).
2013-07-03 T-i-m-b-e-r-r-r! by Jeffrey Saut of Raymond James
Many investors have “stepped into the bucket,” or left the game altogether. Recall that “stepping into the bucket” is when a batter steps away from home plate on his forward swing, usually in response to the fear of getting hit in the head by the ball. The Wall Street parallel is that it seems one of the hardest things to do is something you may not have been trained in at an early age.
2013-06-27 Welcome Back, Mr. Bond by Jeffrey Saut of Raymond James
“We’ve been expecting you Mr. Bond.” The phrase is itself a variant and joins the phrase “Play it again Sam” as a phrase attributed to a film or TV series. I have used said quip over the past few years, having been wrong-footedly expecting a backup in interest rates. While I did finally target the yield low of last July, the ensuing rate rise has been far slower than I would have thought, that is until the past few weeks.
2013-06-19 The Game of Risk by Jeffrey Saut of Raymond James
Ten years ago the COMP was changing hands around 5132. It is now trading at 3423 for a 13-year loss of some 33.3%. Meanwhile, over that same timeframe, the earnings of the S&P 500 are up 83%, nominal GDP is better by some 57.6%, and interest rates are substantially below where they were back then. If you are a college professor such statistics do not “foot” with your teachings because professors tend to believe stock returns are all about earnings and interest rates. I concur, but would add the caveat, “That is if you live long enough.”
2013-06-13 Thinking About Thinking? by Jeffrey Saut of Raymond James
I think a lot about thinking in an attempt to improve my ability to make good decisions. I also work hard to avoid linear thinking, which tends to extend present conditions “linearly” into the future. Such thinking caused investors to ignore the Dow Theory “sell signal” of September 1999 with portfolio consequences that are now legend. That same thinking occurred in November of 2007, concurrent with another Dow Theory “sell signal,” with similar portfolio consternations. Ladies and gentlemen, economic changes, and for that matter stock market changes, tend t
2013-06-07 Never on a Friday by Jeffrey Saut of Raymond James
Over the past 10 years there have been many Hindenburg Omens triggered, but to my knowledge only one of them has actually worked (The Wall Street Journal 8/23/2010 article states the accuracy is only 25%, looking at the period from 1985). Actually, the last Hindenburg signal (December 2012) proved to be an exceptionally good point to buy stocks. I expect this “Omen” will prove to be yet another false signal because the McClellan Oscillator is just about as oversold as it ever gets.
2013-05-31 Buying Stampede by Jeffrey Saut of Raymond James
Over the long weekend I decided to type the words “buying stampede” into Google to see what popped up. To my surprise there were more than 2,000,000 “hits” on the phrase “buying stampede” and many of them were attributed to me. While that was a pretty humbling experience, it also was surprising because I would have thought more investors would have used that phrase in connection with the many upside rally skeins that have occurred over the past dozen years.
2013-05-20 Alpha, Beta! by Jeffrey Saut of Raymond James
I had a somewhat lengthy conversation with Rich Bernstein last Friday. I have been on TV with Rich over the years, but have never really had a one-on-one talk with him. Recall that Richard Bernstein was the Chief U.S. Strategist at Merrill Lynch for years before becoming the eponymous captain of Richard Bernstein Advisors (RBA). I was speaking with Rich because I have developed an interest in a few of the funds he manages for various entities. Rich began by stating he is extremely bullish, believing we are in one of the biggest “bull markets” ever.
2013-05-14 Who is Henry Singleton? by Jeffrey Saut of Raymond James
The year was 1974 and Teledyne (TDY/$77.56/Outperform), on a split-adjusted basis, was trading at about $0.05 per share. By 1986 it was changing hands around $75 per share. Unfortunately, back in 1974 I didn’t have enough money to buy more than 10 shares, having lived through the devastating bear market of 1973 1974 where the D-J Industrial Average (INDU/15118.49) lost 47% of its value.
2013-05-06 That Was the Week That Was by Jeffrey Saut of Raymond James
Informally the TV show, “That Was The Week That Was,” is referred to as TW3and was a satirical comedy program first aired in the early 1960s. The program was considered a lampooning of the establishment. At the time it was considered a radical departure from legitimate television, but it set the stage for many more such radical departures. I revisit TW3 this morning because I have had so many requests for a formal repartee of a number of last week’s Morning Tacks woven into a more formal strategy letter.
2013-04-30 Zebras?! by Jeffrey Saut of Raymond James
We saw many “outside zebras” gorging themselves on stocks in late 2007 as the D-J Industrial Average (DJIA) made a new all-time high and then registered a Dow Theory “sell signal” in November 2007. Subsequently, those outside zebras ended up as “lion lunch” when the senior index shed an eye-popping 53% over the ensuing 17 months.
2013-04-25 Surf's Up! by Jeffrey Saut of Raymond James
Last month I was reminded of “Surf’s Up!” while rereading said report from my departed friend Stan Salvigsen of Comstock Partners fame. While that is the organization Stan, Michael Aronstein, and Charles Minter formed in the late 1980s, Stan’s investment career actually began in 1964 as an analyst with the Value Line Investment Survey. Subsequently, he was an equity strategist at a succession of firms, including Dreyfus, Oppenheimer, C. J. Lawrence, and Merrill Lynch.
2013-04-18 Fortune's Formula by Jeffrey Saut of Raymond James
I reflected on mathematics, probabilities, and odds over the weekend after again reading the book “Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street,” by William Poundstone. The book centers on Claude Shannon, who in the late 1940s had the idea computers should compute using the now familiar binary digits 0s and 1s such that 1 means “on” and 0 means “off.”
2013-04-12 The Great Secret by Jeffrey Saut of Raymond James
When I was a young boy, I remember my father coming home looking very ashen from a visit with a dear friend dying in the hospital. His name was Dell Zink and he was one of my father’s closest friends. Mr. Z, as we kids affectionately called him, was a very religious man; a man who was regarded by his friends as intelligent and philosophical.
2013-04-01 A Fresh Milestone by Jeffrey Saut of Raymond James
Last Thursday the S&P 500 (SPX/1569.19) notched a new all-time causing Ms. Scaggs to pen the aforementioned story in Friday’s Wall Street Journal. I was particularly interested in a sentence further down in the article that read, “The rally in stocks comes as investors warm up to stocks for the first time in years.” That prose sparked memories of an era gone by.
2013-03-25 Voyager by Jeffrey Saut of Raymond James
According to Wikipedia, the Voyager 1 spacecraft is a 1,590 pound space probe launched by NASA on September 5, 1977 to study our solar system and interstellar space. Operating for more than 35 years, the spacecraft receives commands and transmits data back to the Deep Space Network. At a distance of more than 11 billion miles it is the farthest human-made object from Earth and is traveling in a previously unknown region of space. Similarly, the D-J Industrial Average is traveling in a previously unknown region of space as it boldly goes where no man has been before.
2013-03-19 Gambler’s Fallacy by Jeffrey Saut of Raymond James
“My luck has gotta change” is a famous lament that has buried many a player on the crap tables. But as shown in the aforementioned “coin toss” quote, “The outcomes in different tosses are statistically independent and the probability of any outcome is still 50%.” While that’s true in gambling, it is not so true in the stock market. The fact is, there are certain historic precedents in the stock market that can tilt the odds of success decidedly in your favor.
2013-03-11 The Ambergris Factor! by Jeffrey Saut of Raymond James
Investing is a lot like whaling. Investors are constantly searching for that whale of a stock with the "ambergris factor." And, that is what investors were doing last week at the Raymond James 34th Annual Institutional Investors Conference in Orlando, Florida. In attendance were nearly 800 professional investors that were listening to presentations from CEOs and CFOs of more than 300 companies. As stated, just like the portfolio managers were there looking for stocks with the right stuff, so was I.
2013-03-05 The Magic of Compound Interest by Jeffrey Saut of Raymond James
When compound interest works in your favor, it is a blessing. When it works against you, it's a curse! That is a "Jeffreism" I learned the hard way back in the bear market of the early 1970s when I was working for a $100 per week in this business and consequently had my credit cards levered to the "max." The interest rate at the time was 18%.
2013-02-26 A Permanent Investment by Jeffrey Saut of Raymond James
The Buying Power, and Selling Pressure, indicators continue to suggest no major top is in the works. Ditto the Advance/Decline line traded to a new high before the mid-week pullback, also confirming the upside. The major averages continue to reside above their respect 50-DMAs and 200-DMAs; and, those moving averages are rising, another bullish sign. Then there is Berkshire Hathaway (BRK.A/$152,009/Not Covered), which is somewhat of a proxy for the stock market, as it traded to a new all-time last Friday.
2013-02-19 Jesse Livermore by Jeffrey Saut of Raymond James
"There were times when my plans went wrong and my stocks did not run true to form, but did the opposite of what they should have done if they had kept regard for precedent." So said Jesse Livermore, as chronicled in the brilliant book Reminiscence of a Stock Operator by Edwin Lefever; and, stock market historians will recall that Jesse Livermore is still considered one of the most colorful market speculators of all time.
2013-02-12 Don't Just Do Something, Sit There. by Jeffrey Saut of Raymond James
"Don't Just Do Something, Sit There" is the title of a book written by Sylvia Boorstein. I was reminded of the title when I received the following email from a financial advisor at another firm last week...
2013-02-06 The January Barometer by Jeffrey Saut of Raymond James
It's that time of year again when the media is abuzz with that old stock market saying, "so goes the first week of the new year, so goes the month and so goes the year." With the S&P 500 (SPX/1513.17) better by 2.17% over the first five trading sessions of this year, and up 6.10% for the month of January, it is worth revisiting the January Barometer. Devised by Yale Hirsch in 1972, the January Barometer states that as the S&P 500 goes in January, so goes the year.
2013-02-01 For All the Sad Words of Tongue and Pen... by Jeffrey Saut of Raymond James
"For all the sad words of tongue and pen, the saddest are these: It might have been." ... John Whittier; an influential American Quaker poet. Certainly, American poet John Greenleaf Whittier's apothegm has stood the test of time, serving as a universal lament for what "might have been." I was reminded of this maxim last week as Wall Street heard increasing laments from investors on the Street of Dreams.
2013-01-23 It's What You Learn After You Know It All That Counts. by Jeffrey Saut of Raymond James
January is the time of year when strategists, economists, gurus, etc. all join in on the annual nonsense of predicting "What's going to happen in the markets for 2013?" For many, this ritual is an ego trip, yet as Benjamin Graham inferred forecasting where the markets will be a year from now is nothing more than rank speculation. Or as I have noted, "You might as well flip a lucky penny."
2013-01-15 A Conversation With Warren Buffett by Jeffrey Saut of Raymond James
Clearly, the stock market "thinks" something good can happen given the action so far this year. To wit, we ushered in the New Year with a 90% Upside Volume Day on December 31st followed by another 90% Upside Volume Day on January 2nd (90% of total volume traded came in on the upside). Such back-to-back Upside Days are pretty rare, especially at the beginning of the year.
2013-01-07 White Noise? by Jeffrey Saut of Raymond James
"Investing in the financial markets necessarily involves one's ability to change perspectives over time... And there's more of the white noise than ever before."... The Contrary Investor.com. So said the Contrary Investor; and I could not agree more given my sense that the media remains "long" volatility. Indeed, every time volatility increases, so do my phone calls from the financial media as they feel "compelled to come up with rationales for daily movements in asset prices;" last week was no exception.
2013-01-03 Lessons Learned by Jeffrey Saut of Raymond James
Beginning of the year letters are always hard to write because there is a tendency to talk about the year gone by, or worse, attempt to predict the year ahead. Therefore, we are titling this year's letter in an attempt to share some of the lessons that should have been learned over the past few years.
2012-12-31 Armageddon? by Jeffrey Saut of Raymond James
So we wait for the alleged Armageddon for the second time in as many weeks. And as one smart money manager writes, "We should not forget that Congress has a magic eraser. No matter what they do, with a few strokes of a pen everything goes back to effectively January 1, 2013 and the Fiscal Cliff will take its place on the great wall of media creations (remember Y2K?)." Whether you call it Armageddon, or "orchestrated drama," there is nothing in my bag of tricks that suggests this is the beginning of a massive decline for stocks.
2012-12-17 I'm Dreaming of a Green Christmas by Jeffrey Saut of Raymond James
While last week, and this week, often see distortions in individual stock prices due to tax loss selling, Santa Claus tends to arrive the following week. Indeed, the last week of the year, into the first two days of January, has a pretty good track record on the upside with a rally coming about 65% of the time. As stated in previous missives, I expect the same Santa rally this year driven by a "staged in" solution to the fiscal cliff. Most readers know that I have lived in the D.C. Beltway and have a good working knowledge of how our system works.
2012-12-11 New York, New York by Jeffrey Saut of Raymond James
I have loved New York since working on Whitehall Street in the early 1970s. Every year I return around this time of the year to attend Minyanville's Festivus event to raise money for the financial education of underprivileged children. Last week I spent time attending said event, seeing institutional accounts, doing media, and renewing friendships. I was surprised, however, to see pumps still sucking water out of the subway.
2012-12-03 Paintballs?! by Jeffrey Saut of Raymond James
Alas, if only it was that easy to paintball the rapidly approaching fiscal cliff. For those of you traveling the North Yungas Road in Bolivia and unaware of the approaching dangerous cliff, let me explain. Before beginning, however, let me preface by recalling Bill Buckleys famous lament that he would rather be governed by folks listed in the Boston phone book than Harvard professors. To be sure, there are some good politicians inside the D.C. Beltway, but not many!
2012-11-26 Illegitimum Non Carborundum by Jeffrey Saut of Raymond James
In my opinion Richard Fisher said in plain English what Ben Bernanke is trying to say in a much more politically correct way hey Congress, get your act together because I have done just about all I can do on a monetary basis, so it is up to y'all to make the tough decisions on fiscal policy that need to be made to get this economy going again. Surprisingly, I think Congress, and the President, will rise to the occasion because if they don't, and the country falls off the "fiscal cliff" for an extended period of time, it most assuredly will put us back into a recession.
2012-11-19 I'll Be Back by Jeffrey Saut of Raymond James
The call for this week: Obviously, I am back from Europe and y'all have done a pretty poor job of holding the markets together in my two-week absence. Indeed, since the election the SPX has lost 6.28% from its intraday high to last Friday's intraday low. The biggest losing sectors over that timeframe have been Energy (-6.2%), Financials (-5.9%), and Technology (-5.9%). Given the President's views on energy and banks the weakness in those two sectors should not come as a surprise. Still, I think the surprise is going to be a more cooperative environment from our leaders going forward.
2012-11-13 The Election by Jeffrey Saut of Raymond James
As most of you know I was in Glasgow, Edinburgh, London, Zurich, and Geneva during election week seeing institutional accounts and speaking at conferences. Of course the question on all the portfolio managers' (PMs) minds was about the election, the subsequent effect on the economy and the various markets, currencies, and the Fiscal Cliff.
2012-11-05 A New Queen Bee by Jeffrey Saut of Raymond James
By the time a queen bee is five she is old and no longer reproduces, leaving her army of honeybees torn between loyalty and survival. Since the hive cannot survive without a productive queen, the beekeeper reached into the hive with a long-gloved hand and squashes the enfeebled queen. With the entire hive as witness, all know the queen is dead. Absent the scent of their leader, the honeybees panic. Something similar to that "queen bee" sequence may be happening currently. The "old queen," at least in the private sector, was driven by exports and manufacturing.
2012-10-29 The White Hurricane by Jeffrey Saut of Raymond James
I revisit The White Hurricane this morning because it potentially looks like another 100-year storm is heading pretty close to Manhattan. So in addition to dealing with the Benghazi scandal, Syrian atrocities, Euroquake, the "fiscal cliff," a stalled U.S. economy, softening earnings momentum, waning revenues, a dysfunctional government, the nastiest campaign I have ever seen, and who Taylor Swift should date next, Wall Street now has to contend with the potential of being flooded out.
2012-10-23 Silver Anniversary by Jeffrey Saut of Raymond James
It was Friday October 16, 1987 as I looked across Wheat First Securities' trading desk only to see a stark look on the face of my second in command, Art Huprich. At the time the D-J Industrials (INDU/13343.51) were down about 100 points with 30 minutes left in the trading session. And, as stocks swooned I said to Art, "Today is just for practice!" Little did I know how prophetic that statement would prove.
2012-10-10 A Kid's Market by Jeffrey Saut of Raymond James
Last week a particularly wily Wall Street wag asked me, "Hey Jeff, do you know why everyone is underperforming the S&P 500?" "Not really," I responded. He said, "Because the S&P has no fear!" That exchange caused me to recall an excerpt from the book The Money Game. I like this story...
2012-10-01 Me, Lord Marlboro, and the Dow?! by Jeffrey Saut of Raymond James
Mark Twain once remarked, "October, this is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February." However, if the typical presidential election year trading pattern continues to play, after a pause/pullback stocks should trade higher. And, this week is full of economic reports that could cause a pause/pullback. This week we get the global manufacturing data and the U.S. jobs data. The wildcard, however, is Spain.
2012-09-17 The Philosophy of Tops by Jeffrey Saut of Raymond James
The call for this week: To me the only question is if the stock market is going to correct its current overbought condition by going sideways, or if it is going to correct back to the 1400 - 1422 support. In either event I have been pretty confident that the Fed has already begun printing money. That has been eminently evident by the overall action in the commodity markets, the dollar, and the fact that stocks were unable to correct in the normal timing band for a daily cycle low. Indeed, I actually expected an easing of monetary policy out of last month's Fed meeting.
2012-09-10 Performance Anxiety?! by Jeffrey Saut of Raymond James
In last week's verbal strategy comments I suggested participants study the chart pattern of the S&P 500 (SPX/1437.92) and then think about what it would feel like if you were an underinvested portfolio manager (PM), or even worse a hedge fund that is massively short of stocks betting on a big decline. The concurrent performance anxiety would be legend because not only would you have performance risk, but also bonus risk and ultimately job risk.
2012-09-04 Civility by Jeffrey Saut of Raymond James
Webster's defines "civility" as: civilized conduct; especially: courtesy, politeness. But, there was no civility last Friday afternoon. The place, CNBC; the time 3:05 p.m.; the anchors Michelle Caruso-Cabrera and Bill Griffith; the show "Closing Bell"; the guests were myself, Bill Spiropoulos, Lee Munson, and Matt McCormick. The interview started off well enough with each interviewee responding to the anchors' questions.
2012-08-27 Janitor's Job by Jeffrey Saut of Raymond James
Peter Drucker was a writer, consultant, and teacher who was deemed the father of modern management theory. His groundbreaking work turned management theory into a serious discipline, and he influenced or created nearly every facet of its application. He coined such terms as the "knowledge worker," which plays to the intangible capital theme often discussed in these missives.
2012-08-20 The Magic of Compound Interest by Jeffrey Saut of Raymond James
When compound interest works in your favor, it is a blessing. But when it works against you, it is a curse. Just ask Washington Mutual, or General Motors. More recently ask Greece, whose "debt chickens" have come home to roost. When yields are double-digits the power of compound interest working against the borrower is awesome.
2012-08-13 Invest with the Best?! by Jeffrey Saut of Raymond James
I have been a "fan" of the astute Claude Rosenberg ever since hearing him speak. Some will remember him as the author of Investing with the Best, which deals with the daunting task of selecting an investment manager. Given the plethora of investment managers, picking a manager is difficult. That's why many individuals' selection process consists of nothing more than looking at a portfolio manager's track record for the past few years. We think such a simplistic approach is a mistake.
2012-08-06 Yogi Berra by Jeffrey Saut of Raymond James
"It's hard to make predictions, especially about the future." ... Yogi Berra. To be sure, "It's hard to make predictions, especially about the future," and last week was no exception. I began the week noting that there would be a trifecta of potentially market moving news events. The first was the two-day FOMC meeting where I thought the Fed would change its policy statement with a lean toward more accommodation. WRONG.
2012-07-24 Never Lost?! by Jeffrey Saut of Raymond James
Wall Street folklore suggests that in 10 years any fool can make every mistake there is in the stock market and that a really smart person can do the same in half the time. I don't know how long it took me, but I have tried to learn from those mistakes and avoid repeating them! Indeed, everybody who finally learns how to make money in the stock market learns his own way. I like this tale.
2012-07-17 Cognitive Dissonance by Jeffrey Saut of Raymond James
At the race track if too many participants bet on the same horse, the betting odds on that horse go down and if he wins the payout is small. Popularity reduces the reward. Similarly in the stock market if too many participants put their money on the same stock, and it becomes a market favorite, driving the price ever higher, the upside potential is diminished. Popularity reduces the potential reward.
2012-07-10 One Way Pockets by Jeffrey Saut of Raymond James Equity Research
This morning I awoke to headlines "Asia Signals Drop In Global Demand," "Euro Zone Fragmenting Faster Than EU Can Act," "European Worries Send Shares Lower," and "Investors Brace For Shaky Earnings Season." Such musings have the S&P 500 futures off about six points. Somewhat offsetting these negative quips are these headlines, "Fed Officials Favor QE3" and "Obama To Seek One-year Extension For Some Of Bush Tax Cuts;" but alas, this morning the negatives are outweighing the positives.
2012-07-03 Gleanings by Jeffrey Saut, Art Huprich, Scott Brown of Raymond James Equity Research
With this Gleanings report, we begin a monthly chart presentation and discussion, which attempts to pull together the separate disciplines of Economics, Fundamentals, Technical analysis, and Quantitative analysis. The report contains what we think are currently some of the most important charts. We will have an overview and then highlight some of the key near-term variables that we believe could have a measurable effect on where the various markets are going.
2012-07-02 The Virtue of Necessity by Jeffrey Saut of Raymond James Equity Research
The call for this week: In my opinion, last week the Commodity Index bottomed and the Dollar Index topped. If so, recession fears should abate in the months ahead. Moreover, if a recession was really on the horizon "junk" bond yields would be rising on worries of increased defaults and that is not happening with the iShare High Yield Fund (HYG/$91.29) attempting to make a new reaction high (i.e., lower yields).
2012-06-25 Perspective; or where you stand is a function of where you sit! by Jeffrey Saut of Raymond James Equity Research
Perspective is the capacity to view things in their true relations or relative importance. And last Thursday the stock markets perspective changed abruptly. The day started out well enough with an opening 20-point pop to the upside, but from there the Dow Dive commenced. The causa proxima for the dive was more softening economic reports from China and Germany followed by a lame Philly Fed report, which saw that index accelerate its swoon from Mays -5.8 reading to -16.6.
2012-06-18 Mood by Jeffrey Saut of Raymond James Equity Research
M-O-O-D: That is the important word right here. And, what a difference a few weeks makes for last week the markets seemed to switch from the glass being half-empty to half-full leaving Mr. Market in a more forgiving mood. Importantly, market mood frequently sets the near-term trend. If the mood is positive, all things are possible; if it is negative, little is.
2012-06-11 Atlas Shrugged?! by Jeffrey Saut of Raymond James Equity Research
The call for this week: Over the weekend the eurozone agreed to lend Spain up to 100 ($126 billion) to shore up its teetering banks. That decision prompted this from my friend David Kotok, captain of Cumberland Advisors: The fact is the absence of banking collapses is good news. That is correct. Good news! We establish that good news by what we DO NOT see on TV. We do not see banks collapsing and failing to pay depositors. This means we may not witness the euro system collapsing and failing. Bank runs and deposit failures are symptoms of liquidity constraints.
2012-06-04 1-800-GET-ME-OUT?! by Jeffrey Saut of Raymond James Equity Research
The call for this week: Friday was the first day of hurricane season here in Florida, yet the storm didn't hit our beaches but rather blew onto the Street of Dreams with a 275-point "storm surge." The media attributed Friday's Flop entirely to the disappointing employment numbers, but the truth was the market was already headed down before the release of those numbers. And when the SPX's 1290 level was breached, the rout was on. And despite the break below my 1290 pivot point I can't shake the feeling that all of this is just part of the bottoming process.
2012-05-29 Being There by Jeffrey Saut of Raymond James Equity Research
The call for this week: I am out of the country seeing institutional accounts, so these may be the only strategy comments for the week. In my absence the stock market will likely resolve its near-term directionality because the "selling stampede" is now 18 sessions long and such stampedes tend not to last for more than 17 to 25 sessions. Despite the decline, by my work there has been no Dow Theory "sell signal," although there are some Wall Street wags who are using very short-term pivot points and believe otherwise.
2012-05-21 I Should Have?! by Jeffrey Saut of Raymond James Equity Research
The brilliant Lee Cooperman, captain of hedge fund Omega Advisors, quoted Joe Rosenberg on CNBC last week, You can have cheap equity prices, or you can have good news, but you cant have both! Clearly, we currently have bad news, which in my opinion has resulted in cheap equity prices. Playing to that quote, my father always told me, Good things tend to happen to cheap stocks. As stated, the real question is, If we get a rally from this oversold condition is it the start of a new up leg, or is it just a compression rally that will be brief followed by still lower prices?
2012-05-15 Balance, Grasshopper by Jeffrey Saut of Raymond James Equity Research
The stock market has been consolidating its huge gains from the October 4 undercut low for roughly three months in a ~75 point range (1350-1420). That consolidation has allowed the markets internal energy to be rebuilt and the oversold condition to be worked off. Because of that process, I continue to think the odds that we will see a move below the 1320-1340 zone remain pretty dim. Accordingly, I suspect the stock market is going to put in an intermediate bottom probably this week.
2012-05-07 Toto, I have a feeling were not in Kansas anymore. by Jeffrey Saut of Raymond James Equity Research
While most people know The Wizard of Oz as one of the most popular films ever made, what is little known is that the book was based on an economic and political commentary surrounding the debate over sound money that occurred in the late 1800s. Indeed, L. Frank Baums book was penned in 1900 following unrest in the agriculture arena due to the debate between gold, silver, and the dollar standard. I revisit the dollar/gold topic this morning because I think the most important chart in the world may be in the process of breaking down. The chart in question is that of the U.S. Dollar.
2012-04-30 Truth or Consequences? by Jeffrey Saut of Raymond James Equity Research
When youre wrong you say youre wrong; at least thats what the pros do. Clearly, I have been somewhat wrong by being conservative, but not by much because the INDU is actually 70 points lower than at the April 2, 2012 intraday high. Given the aforementioned litany of cautionary indicators, my sense remains the S&P 500 (1403.36) will spend some more time below 1425 while the short-term overbought condition is alleviated and the stock markets internal energy is rebuilt. Fridays market action only reinforced that belief with the indices gapping higher and then closing well below those highs.
2012-04-23 Dow Direction Dictates by Jeffrey Saut of Raymond James Equity Research
This week we will see more major companies reporting earnings. From our research universe, stocks that are favorably rated by our fundamental analysts and appear positive on our proprietary algorithms are: Brinker ; Baidu; Pultegroup; and Caterpillar. For the past few weeks I have wrongly suggested that my sense is the S&P 500 (SPX/1378.53) will remain mired in the 1385 1425 consolidation zone. Subsequently, the SPX dropped below that envisioned zone, yet has rallied back into the 1375 1385 zone, which has now become an overhead resistance level.
2012-04-09 Pigs and Panics! by Jeffrey Saut of Raymond James Equity Research
As stated, this is a key week for the equity markets and we continue to wait and see how the equity markets resolve themselves on a short-term basis, a trading stance we have been in for weeks. Meanwhile, for investors, I met with a portfolio manager last week whose investment style I think is suited for the current stock market climate. The investment style of Troy Shaver, PM of Dividend Asset Capital, sub-advisor to Goldman Sachs Rising Dividend Growth Fund (GSRAX/$15.05), is to invest in companies that increase their dividends by 10% per year on average for 10 years in a row.
2012-04-02 Shrugging Off Bad News! by Jeffrey Saut of Raymond James Equity Research
March came in like a bear, but went out like a bull, capping the best first quarter since 1998. For the quarter the SPX gained 11.99% for its 10th best start of the year ever. For me it was almost like dj vu as I recalled the best first quarter of my lifetime, which was 1975s surge of 21.59%. Why dj vu? Well, it is because I began writing strategy In November of 1974 with the line, I believe now is the time to accumulate stocks. At the time the Dow was trading below 600, having fallen from its March high of 891 for a 34% decline.
2012-03-26 Patience by Jeffrey Saut of Raymond James Equity Research
I continue to exercise patience with the equity markets while I sit on the cash raised over the past number of weeks. Unlike many, I consider cash an asset class. Indeed, to assume the investment opportunity sets that are available to you today are better than ones that will present themselves next week or next month is nave. To take advantage of those opportunity sets one needs to have some cash. For those wishing to be more aggressive, it looks to me as if the U.S. dollar is in the process of breaking down.
2012-03-20 LOSE CASH by Jeffrey Saut of Raymond James Equity Research
I do expect stocks to be higher by year end. Last Tuesdays upside breakout turned out to be the first 90% Upside Day of this year. To negate that action would require a sell-off on heavy volume that results in a closing price below the previous rallys closing high of 1374.09 on the SPX. Still, the stock market may have enough forereach to tag 1420, but in my opinion the games not worth the candle. For investors not sharing my counsel, I continue to like the strategy of buying stocks that have recently declined for one-off reasons where the bullish fundamental story is still intact.
2012-03-13 The Ambergris Factor! by Jeffrey Saut of Raymond James Equity Research
I had a meeting with two PMs from Switzerland that had 10 questions they wanted answered. 1. Would you buy cyclical stocks or defensive stocks? I would buy cyclicals because I dont believe we are going to see another recession in the U.S. for the near future. 2. 2011 was a risk on/risk off year, so is it a top down or bottom up strategy for 2012? Last year you only had to get two things right. You had to raise cash in March/April and put it back to work during the bottoming sequence of August October. One always needs to employ a bottom up strategy combined with a top down view.
2012-03-06 Street Smarts by Jeffrey Saut of Raymond James Equity Research
While I remain cautious (not bearish) there are still things to do. For example, I continue to like the strategy of looking at companies whose share price has collapsed for a one-off event. Recall, this was the case with Acme Packet (APKT/$30.26/Strong Buy) back in January, where in our analysts view the stock swoon had taken a lot of the price risk out of the equation. A similar sequence occurred last week with Vocus (VOCS/$13.52/Strong Buy), where our fundamental analyst maintains his positive view.
2012-02-28 Fun, Fun, Fun by Jeffrey Saut of Raymond James Equity Research
There have now been 37 trading sessions in 2012 and so far the S&P 500 has yet to experience a 1% Downside Day. This 37-session skein has occurred 11 other times in the past 84 years and has on every occasion except one seen the equity markets higher by the end of the year. Still, the rise since the buying stampede ended, which stopped on January 26, 2012 at Dow 12841.95, has felt unnatural to me. Surprisingly, the Industrials reside only 141 points above their intraday high of January 26th, causing one market maven to exclaim, no wonder I feel like were in the Trading Twilight Zone.
2012-02-22 Abbondanza! by Jeffrey Saut of Raymond James Equity Research
Despite overbought conditions, a Dow Theory upside non-confirmation, the end of the buying stampede on January 26th, a stock market that has used up most of its internal energy in the short-term, a massive downside reversal from Wall Streets premier stock last Wednesday (AAPL/$502.12), saber rattling in the Hormuz Strait, a ~21% rise in the price of gasoline since mid-December, et all the stock market has trudged higher. Manifestly, the SPX has now gone 35 trading sessions in 2012 without suffering a 1% down day.
2012-02-14 The System will Hold Together... by Jeffrey Saut of Raymond James Equity Research
The implications are that things are likely going to get a little less fun for investors for a while with the major averages transitioning from a steep price rise to more of a sideways to downward pricing structure. This does not mean you cant make money. On the upside, my algorithms show that our fundamental analysts Strong Buy ratings on 7.6%-yielding CenturyLink (CTL/$38.02) and non-yielding Whiting Petroleum (WLL/$50.89) are setting up for a potential upside breakout. Meanwhile, our analysts Underperform rating on ViaSat (VSAT/$45.22)is being confirmed by my algorithms to the downside.
2012-02-07 Compelling Valuation, or Value Trap? by Jeffrey Saut of Raymond James Equity Research
Remember all those Negative Nabobs that caused you to panic and sell-out at the August lows? Or, the Bear Boos who told you the undercut low of October 4, 2011 was the start of a whole new leg to the downside? Then there was the Cowering Crowd that insisted the first half of 2012 was going to be terrible. Such rants have left the world profoundly underinvested in U.S. equities. Revenues and earnings are at all-time highs, yet the SPX is ~13.5% below its October 2007 high; indeed, Strange brew trying to get through to you (Cream 1967; Eric Clapton at his finest).
2012-01-31 Precisely Watson? by Jeffrey Saut of Raymond James Equity Research
I have repeatedly commented that earnings comparisons were going to get more difficult because the trailing four quarters earnings reports have been so strong; and, thats precisely what is happening. For example, with 180 of the S&P 500 companies reporting, there has been 1.81 upside earnings surprises for each disappointment versus a more normal ratio of 3:1. Accordingly, it makes sense to screen for companies producing Triple Plays that would be companies beating earnings and revenue estimates and also raising forward earnings guidance.
2012-01-24 Everybodys Unhappy!? by Jeffrey Saut of Raymond James Equity Research
On January 3 I stated that session felt like an emotional peak and that January 10 felt like the price peak. Subsequently I wrote, The only question in my mind is if the markets are going to have a pullback into the 1230 1240 support zone, or go sideways to correct their overbought condition and allow the internal energy to be rebuilt. So far, it has been a sideways consolidation until last weeks upside breakout causing one old Wall Street wag to exclaim, Breakout or fake-out?! On a short-term basis I think it is a fake-out believing a trading top is due this week ...
2012-01-17 The Turtle? by Jeffrey Saut of Raymond James Equity Research
The turtle makes no progress until it sticks its neck out; I have been sticking my neck out since Thanksgiving, believing the Santa rally was beginning. I stuck with that strategy until the first day of trading this year, which felt like a short-term emotional trading peak. A short-term price peak occurred on 1/10/12 at 1296.46 basis the SPX. The only question in my mind was whether we were going to get a pullback into the 1230 1240 support zone, or if we would experience a sideways correction as the overbought condition was worked off and the markets internal energy was rebuilt.
2012-01-09 The January Barometer by Jeffrey Saut of Raymond James Equity Research
Its amazing that equity markets have rallied in light of the strong U.S. dollar. That action suggests that stocks are not ready for the pullback I have been expecting following last Tuesdays upside blow off. Still, while the Dow Industrials and Dow Transports have tagged new reaction highs, the SPX and NDX have not. Such divergences always leave me cautious, especially since we are past the seasonally sweet spot for stocks. At some point we are going to get a profit-taking event, whether it is from last Tuesdays intraday high or the 1300-1320 overhead resistance zone remains to be seen.
2012-01-03 The Year of the Dragon by Jeffrey Saut of Raymond James Equity Research
Since the day after Thanksgiving I have stuck with the strategy that the Santa Claus rally had begun. On November 25th the SPX was changing hands around 1158. We are now 100 points higher. Consequently, I would not chase the dragon right here since I anticipate that an upside blow off is due ...
2011-12-27 Bear Trap by Jeffrey Saut of Raymond James Equity Research
StockCharts.com defines a bear trap as a situation that occurs when stock prices break below a significant level and generate a sell signal, but then reverse course and negate the sell signal. While that's the formal definition, I have often referred to bear traps as undercut lows. The biggest one in recent history occurred on October 4, 2011. I revisit the undercut low thesis today because it appears that is precisely what happened last Monday afternoon when the S&P 500 (SPX/1265.35) knifed through its previous reaction low of 1209.47.
2011-12-20 By The Side Of The Road by Jeffrey Saut of Raymond James Equity Research
For months I have stated, While I guess we could talk ourselves into a recession, like the aforementioned hot dog folks, most of the finger-to-wallet ratios I monitor are not pointing towards a recession. To be sure, railcar loadings (especially intermodal) have been pretty strong for the past few months. State tax receipts are up year-over-year. East Coast port traffic, both inbound and outbound, remains perky. And, one of the best walk around indicators, namely foot traffic at the casual dining restaurants because it is the most discretionary of all consumer purchases, is still positive.
2011-12-13 Self Sustaining by Jeffrey Saut of Raymond James Equity Research
Last week the ECBs interest rate cut took center stage, but that cut should be viewed within the context of the 40 world wide interest rate cuts that preceded it. Clearly, there is a global easing cycle underway; and, we think you will see more such news this week when the FOMC announces it policy statement Tuesday. Stocks will continue to grind irregularly higher driven by portfolio managers trying to play catch-up, the upside seasonal bias, low valuations, still depressed sentiment readings, and the knowledge that we have now entered the best performing six months of the year for stocks.
2011-12-06 Sauta Clause by Jeffrey Saut of Raymond James Equity Research
December has been the best performing month of the year over the past 100 years with positive returns 73% of the time. And while last weeks 7.39% romp will likely not be duplicated quickly, the path of least resistance remains up according to our work. That said, while the DJIA bettered its 200-day moving average last week, the SPX and D-J Transportation Index did not. Consequently, a divergence currently exists that could lead to some sort of pause and/or pullback. Therefore, look for opening strength this morning followed by attempts to sell stocks back down.
2011-11-29 The Oath by Jeffrey Saut of Raymond James Equity Research
The week before Thanksgiving has been up eight of the past nine years...that is up until last week. While many pundits cited the failed German Bund auction, Chinas slowing PMI Index, another bank stress test, a downwardly revised GDP report, Euroquake, etc.; my hunch is the real reason for the recent swoon is our own government. The breakdown of the Super Committee has clarified the differences between the two parties. Americans must now decide to accept either serious reductions in their healthcare and pension programs, or substantially higher taxes, and probably both.
2011-11-22 The Joy of Cooking by Jeffrey Saut of Raymond James Equity Research
Last Friday CNBCs Maria Bartiromo asked me what was going to happen with this weeks Super Committee decision? After jokingly responding that if past is prelude if the Super Committee doesnt arrive at a decision they will appoint a SuperDuper Committee, I then stated, I dont think the Super Committee will reach a consensus.I also opined, I believe there is a wink and a nod between President Obama and Speaker John Boehner to not implement the mandatory cuts and let the 2012 Presidential election resolve the debate between increased taxes and spending cuts.
2011-11-14 Italian Job Redux by Jeffrey Saut of Raymond James Equity Research
On Wednesday, Enel, the major Italian oil company, said, Its time to tell the truth to Italians. Number 1: The party is over. The party referenced is the welfare state that has careened so many Mediterranean countries down the entitlement road. Recently, driven by the sovereign debt markets, reality has arrived at the crossroads along with the realization that the welfare-state needs major austerity reforms. Ignoring lessons our union leaders steered us down the same road as Ohio voted to reverse a law designed to curb the bargaining power of unions representing public employees.
2011-11-09 Ich bin ein Berliner by Jeffrey Saut of Raymond James Equity Research
Last week at the G20, like John Kennedy, President Obama tried to emphasize support for a German bailout plan to prevent a Greek tragedy. The tragedys trajectory rose sharply on Tuesday when Papandreou announced there would be a referendum to decide if the new austerity measures for a second bailout would be acceptable to the Greek people. That news shocked the worlds equity markets, which was reflected by the Dows Dive of some 297 points. I was seeing portfolio managers at the time and told them that in my opinion Papandreous prose was telegraphing a Greek withdrawal from the EU.
2011-11-01 Crescendo? by Jeffrey Saut of Raymond James Equity Research
Websters defines the word crescendo as, The peak of a gradual increase; or a climax. And, thats the climatic feeling I got last Thursday when the D-J Industrials sprinted some 340 points on the European euphoria to close above 12000 for the first time since August 2, 2011. Such action caused one old Wall Street wag to exclaim, Buy on the cannons and sell on the trumpets! Clearly we bought on the cannons back on October 4th when the indexes broke below their respective August 8th and 9th selling-climax lows.
2011-10-25 Got Jobs?! by Jeffrey Saut of Raymond James Equity Research
Whether this stampede turns out to be that strong will likely depend on the economy, our changing political environment, and Europe. However, I remain cautiously optimistic, believing there is a change afoot inside DC whereby business people are being elected, fostering the hope of simple, market-based solutions to our Nations ills. And, over the last three weeks the stock market appears to be sensing this as well with winning sectors continuing to be Energy, Financials, Consumer Discretionary, and Materials. Such sector rotation suggests the stock market believes things are getting better.
2011-10-18 Wrong by Jeffrey Saut of Raymond James Equity Research
Near-term overbought is our short-term call, yet we think the lows are in for the year. Regrettably, we also believe there has been so much technical damage that the May 2nd intraday high of 1370.58 marks the high for the year. Nevertheless, we are buyers of favored stocks on weakness given our sense that there will be no recession and that earnings will continue to surprise on the upside.
2011-10-11 Undercut Low? by Jeffrey Saut of Raymond James Equity Research
What do you mean by an undercut low? was a question I received in numerous emails after last Tuesdays verbal strategy comments. Well, for the past few months I have been talking about the similarities to the declines, and subsequent bottoming sequences, of October 1978 and October 1979. I know that the environments are very deferent but, I am referencing just the pricing action of the D-J Industrials. As often stated, those aforementioned declines were just as severe/quick, as what we experienced from the 7/27 intraday high of 12751.43 into the selling climax lows of August 8th and 9th.
2011-10-04 Painful Ups and Downs by Jeffrey Saut of Raymond James Equity Research
Goodbye and good riddance to 3Q11, which has been the worst performing quarter for the SPX since 4Q08. Welcome to 4Q11, and the month of October, which has been termed the Bear Killer since many downtrends have found their nadir in the Halloween month. Indeed, recall that after being bearish since the Dow Theory sell signal of November 21, 2007, we turned bullish in October 2008 when 93% of all the stocks traded on the NYSE made new annual lows. Hopefully, this month will prove as kind for stocks as 2008.
2011-09-26 Its 11:01? by Jeffrey Saut of Raymond James Equity Research
Its 11:01 p.m., do you know where your children are? is a phrase that haunted me reminding my parents that I was out past my curfew. Similarly, investors asked themselves last week, Its 1101, do you know where your stocks are? as on Wednesday the Dow dove through last Mondays intraday low of 1188.36 and headed below the August 9th selling climax low of 1101.54. For 7 weeks I have discussed the importance of holding above the 1100 level, if our analogue to the October 1978 and October 1979 bottoming sequence is going to hold. So far, the correlation between then and now is remarkable.
2011-09-20 Deja Vu? by Jeffrey Saut of Raymond James Equity Research
Over the past 41 years I have observed a few comparisons that have had fairly good correlations to what was occurring at the time and have used them to help allay panic among investors at inappropriate times. Most recently, I have suggested the panic lows of August 4th and 8th showed such extreme panic-selling readings that participants had to go back to May 13, 1940, when the Germany Army broke through the Maginot Line and invaded France, to find similar panic levels. That observation was consistent with the analogue I have been using for two months.
2011-09-13 Balance Grasshopper by Jeffrey Saut of Raymond James Equity Research
Over the weekend Greece did not default, although for over a year I have expressed the view that Greece has to default; a stance I continue to embrace. This morning, however, rumors are swirling again about a Greek default along with hints that Germany is not going to prevent it. That leaves the pre-opening futures down over 20 points, which would represent a retest of the selling-climax lows. While I am hopeful this will be a successful retest, consistent with the October 1978/1979 bottoming sequence, if 1100 is decisively broken it would imply the rally from the March 2009 lows is over.
2011-09-08 Can You Hear Me Now? by Jeffrey Saut of Raymond James Equity Research
In last weeks verbal strategy comments I cautioned to not pay up for stocks since the NYSE McClellan Oscillator was about as short-term overbought as it ever gets. Additionally, I stated that if this is a replay of the October 1978/1979 bottoming sequence we will have opportunities over the coming weeks to buy select stocks at lower prices. Given the European news over the weekend, and yesterdays Euroland equity markets meltdown, it should come as no surprise that the S&P 500 preopening futures are sharply lower this morning.
2011-08-31 The Summer Wind by Jeffrey Saut of Raymond James Equity Research
Just like the surfer interviewed over the weekend who grabbed a board and leapt into the Irene-induced waves, investors need to grab a board and catch a wave if they want to achieve success. But to do that, first you need to get into the water! The time to stand on-shore was months ago, not after a ~20% decline in the S&P 500 (SPX/1176.80) from its intraday high on May 2 to its intraday low on August 9. While we have been pretty conservative in our stock recommendations over the past three weeks, we would become more aggressive if the SPX can break out above the recent rally-high of ~1208.
2011-08-23 Pounded by Jeffrey Saut of Raymond James Equity Research
I have been pounded with questions about the Dow Theory sell signal I spoke of; and, that occurred three weeks ago. The ubiquitous question has been Hey Jeff, how can you tell people to buy in light of the signal? My response has been that such a huge amount of energy had been used up in rendering the Dow Theory sell signal that the market, at least on a short-term trading basis, is likely a buy. Reinforcing that view are numerous oversold readings of epic proportions.
2011-08-17 Terminator 3: Rise of the Machines by Jeffrey Saut of Raymond James Equity Research
While people who live in glass houses should not throw rocks, I have to observe how the media has trotted out super-bear Robert Prechter at every major stock market low for the past decade. They featured him again last week. Combine such anecdotal gleanings with the aforementioned market valuation metrics and it suggests a downside inflection point may have been reached. And while the bottoming process should take weeks, many individual stocks have likely already bottomed.
2011-08-10 Rumours by Jeffrey Saut of Raymond James Equity Research
When asked how he made his money, Mr. Rogers answered, I sell euphoria and buy panic. Currently, gold and Treasuries are gapping on the upside; and, stocks are gapping on the downside. The implication, though I believe gold is in a secular bull market, suggests positions should be sold in metals and the freed-up cash should be used to buy sound stocks with decent dividend yields. The weeks ahead will determine if this is the correct strategy. All said, IMO it is too late to panic. The time raise cash, was months ago. Now it is time to selectively redeploy that cash into select equities.
2011-08-03 Default? by Jeffrey Saut of Raymond James Equity Research
We have many great campaigners inside the D.C. Beltway, but far too few have the ability to govern given that their main concern is to get reelected. Maybe Warren Buffet had the right idea when he said, I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than three percent of GDP all sitting members of congress are ineligible for reelection. As for the Nations AAA rating status, I think we are in for a downgrade no matter what happens inside the Beltway as the pendulum always swings too far in each direction.
2011-07-25 Name That Tune?! by Jeffrey Saut of Raymond James Equity Research
Last week saw the U.S. Dollar Index decline by ~2.6% and gold tag a new all-time high of $1610.70. The real star of the week, however, was Sugars Surge of 7.87%. I cant imagine the President would want to go down in history as the Captain whose watch saw America lose its AAA status. Accordingly, I would continue to cautiously favor the upside, on a risk-adjusted basis, for if the debt ceiling is not raised we see another downside "hit." And this morning it looks like another hit, at least on a short-term basis, as our elected leaders continue to talk to the wind.
2011-07-18 Worried by Jeffrey Saut of Raymond James Equity Research
Last Monday proved to be a 90% Downside Day whereby 90% of the total volume traded came on the downside, while 90% of total points were likewise negative. Typically, 90% Downside Days are followed by rally attempts lasting five to seven sessions. Obviously, that wasnt the case last week and it concerns me. Also concerning is the fact the often mentioned 1320 level was violated and despite the three separate rally attempts that were staged to recapture 1320, it was all of no avail. This brings us to this week, where 2Q11 earnings reports will be Wall Streets focus.
2011-07-12 I'm Back by Jeffrey Saut of Raymond James Equity Research
Indeed, I visited 10 European cities over the last two weeks, and spoke with roughly 200 PMs, most of which were bearish and/or very bearish on U.S. equities. Their fears centered on our countrys debt situation, the dollar, and the debt ceiling. It seems there is a genuine belief in Europe that the U.S. debt ceiling wont be increased, leading to a default with an attendant rating downgrade. The Europeans dont understand the political gamesmanship currently being played that will be resolved with a debt ceiling increase at the last minute.
2011-07-06 Happy Birthday America by Jeffrey Saut of Raymond James Equity Research
For the past few weeks I have been suggesting the equity markets were in the process of bottoming. While my ideal pattern was for a downside selling-climax into the 1230 1250 zone, it just doesnt look like that is going to happen since the SPX tested, and held, its 200-DMA three times over the last few weeks. Yesterday our nation celebrated its 235th birthday. I commemorated the day by re-reading the lyrics from the Star-Spangled Banner in honor of our forefathers courage. While most citizens know the first stanza of said anthem, few know the other three. Nor do they know it's history.
2011-06-28 Greetings From London by Jeffrey Saut of Raymond James Equity Research
It is depressing that the equity market couldnt build on its 90% Upside Day of June 21. It is also depressing that the NASDAQ broke below its 200-DMA (COMP/2652.89), since we like leadership from the NASDAQ. Importantly, the recent decline is all about the fact that Selling Pressure has increased modestly, rather than a significant decline in Buying Power. Nevertheless, we are in defensive mode until the SPX can close above the 1292 1296 level, followed by a close bettering the 1316 1320 zone. To get really bullish would require a close above 1346. Until then, we remain circumspect ...
2011-06-21 Down the Rabbit Hole by Jeffrey Saut of Raymond James Equity Research
In last weeks comments I noted the SPX had been down for six consecutive weeks for only the 17th time since 1928. As Bespoke Investment Group wrote early last week, If there is any consolation for the bulls, it is that there have only been three weekly losing streaks of seven or more (weeks) for the index. (After six consecutive weeks down) in week seven, the SPX has risen an average of 1.03%. While last weeks gain of 0.52% fell short of that average, the SPX did manage to avoid its seventh weekly wilt. Not so for the NASDAQ, which recorded its seventh down week with a loss of 1.03%
2011-06-13 Ouch by Jeffrey Saut of Raymond James Equity Research
While equity markets can certainly do anything, if the SPX declines to the lows registered in March of 2009, which is what Walter Zimmerman thinks, and if the current earnings estimates are anywhere near the mark, it would leave the S&P 500 trading at less than 6x earnings with a dividend yield (excluding any dividend increases) approaching 5%. I just dont believe this is in the cards, given my assumption the economy is NOT going to double dip. Amid such market machination I think investors should keep their heads screwed-on straight and begin compiling their buying lists.
2011-06-06 There You Go Again by Jeffrey Saut of Raymond James Equity Research
Last Wednesday was a 90% Downside Day, meaning 90% of the total points lost, and 90% of the total volume came on the downside. Typically, such Downside Days are followed by upside rebounds. Clearly, that did not happen, bringing into view the SPXs April intraday reaction low of 1294.70. Violating that would imply 1250 and then 1230. While I dont think that is what will happen, the stock market doesnt care much about what I think. Hence, the SPX had better hold above the April reaction lows or we will be forced to raise even more cash.
2011-06-01 Efficient Markets?! by Jeffrey Saut of Raymond James Equity Research
I am writing this Monday night without the benefit of seeing Tuesday mornings pre-opening futures because I will be on a plane. Still, I am optimistic given last weeks backdrop. While it is clear economic statistics have softened, we believe this is largely attributable to Japan (Fukushima), the European debt debacle, the Middle East, and our continuing weird weather. That optimism is reinforced by another all-time high in corporate profits (before tax and adjusted for inventory valuation adjustment and capital allowance adjustment), which is good for capex and employment.
2011-05-23 A Few of My Favorite Things by Jeffrey Saut of Raymond James Equity Research
To begin, commodities are likely on summer vacation before they resume their secular bull market, however, I continue to like a number of special situations. Williams Company (WMB/$30.76/Outperform) reported a solid 1Q11 quarter. Our bullish thesis on Williams is supported by (1) we believe the companys E&P assets will garner a higher valuation in the market place as a stand-alone entity when the company splits itself into two parts; (2) we believe the market is undervaluing Williams ownership of the Williams Partner GP, and (3) we expect strong growth from the Canadian midstream assets.
2011-05-17 Plantar Fasciitis? by Jeffrey Saut of Raymond James Equity Research
In past missives I have opined that China is slowly revaluing its currency in an attempt to create more domestic demand, dampen its inflation rate, and placate U.S. leaders. To be sure, the Chinese realize in the long-run the manufacturing/export driven economic model will eventually morph to the lower cost of labor, which is quickly becoming the Vietnams of the world. Accordingly, they are following what Brazil did with its currency (the Real) a few years ago. To wit, Brazil raised interest rates and increased the value of its currency.
2011-05-09 Me, Lord Marlboro and the Dow!? by Jeffrey Saut of Raymond James Equity Research
While the intermediate/long-term internal stock market energy remains fully charged for a move higher, the markets short-term energy still needs some time to rebuild. This probably means another week, or two, of consolidation and/or attempts to sell stocks down before we begin another leg to the upside. Even so, I dont think any selling will gain much downside traction, implying the zone between the S&P 500s (SPX/1340.20) 50-day moving average (DMA) at 1320 and the 1340 level should provide support for stocks.
2011-05-03 Lucky People by Jeffrey Saut of Raymond James Equity Research
Since last June my unencumbered observation has been, You can get cautious from time to time, but dont get bearish. That mantra has served us well, especial since last September, because beginning on September 1, 2010 the senior index has not experienced anything more than a one- to three-session pause/pullback making today the 174th session in its upside skein. Such a stampede is unprecedented in my notes of over 40 years. Still, It looks like its going up to me.
2011-04-26 Rude Crude by Jeffrey Saut of Raymond James Equity Research
Oil that is, black gold, Texas Tea; yet, rude crude still feels a bit stretched in the short-term given that West Texas Intermediate (WTI) is ~30% above its 200-day moving average (DMA). Indeed, over the past few weeks oil has become almost as extended above its 200-DMA as it was in July 2008, and we all know how that ended. Not that I am predicting a similar collapse in the price of Texas Tea, but rather that a consolidation/pullback period is likely, which could provide the backdrop for another leg up in stocks (even the energy stocks).
2011-04-19 Gangs of New York by Jeffrey Saut of Raymond James Equity Research
I love New York City! Still, as I walked from the airplane into the terminal last Monday, I got the feeling I was traveling back in time, La Guardia is in need of a refresh. All in all, I felt like I was in a third-world country, not the greatest city in the world. Nonetheless, my trip started with a couple of hedge funds. At noon a segment on Breakout." From there, it was off to see some PMs before the next media hit at Fox Business with, Brian Sullivan. While I am kindred spirits with these media anchors, by far the highlight of last Monday was dinner with President Bill Clinton.
2011-04-12 The Return of the Carry Trade?! by Jeffrey Saut of Raymond James Equity Research
There may be an increase in the carry trade in both dollars and yen, but I dont think this is the main factor behind the rise in commodity prices and demand for risk assets. Bank policies matter a lot for currencies. However, the U.S. is not going to raise rates anytime soon, implying a somewhat softer dollar. Youre hearing inflation concerns among some of the district bank presidents, but that is a minority view. The Fed sees higher oil prices as bad for growth, not a catalyst for a higher trend in underlying inflation; but officials will be watching the trend in core inflation, and wages.
2011-04-05 Shad Rowe?! by Jeffrey Saut of Raymond James Equity Research
Since the 1980s I have read articles by Shad in Forbes, Fortune, Barrons, etc. and always found them insightful. Moreover, I have often used his sagacious comments in these missives to emphasize those gleanings in an attempt to help investors profit from them. This morning is no exception. Shad outlined why he is a steadfast bull on the American stock market. Said bullishness does not stem from his nature, for a couple of decades ago he enjoyed great success as a short seller. Nope, Shads bullishness is based on the belief that innovation is thriving in America.
2011-03-28 Be Conservative, Not Conventional by Jeffrey Saut of Raymond James Equity Research
Whether the March 16 ?low? gets retested is now doubtful. Still, a partial pullback to 1275 on the S&P 500 cannot be ruled out because the recent rally has occurred due to more of a decline in Selling Pressure rather than enthusiastic buying. The decline from February 18 into the March 16 ?low? was accompanied by two 90% Downside Days. As well, there were two nearly 90% Downside Days during the decline. Typically it takes at least one Upside Day to conclude that a correction is over and so far we have not seen that. Still, I think a lot of the price risk has been removed from select stocks.
2011-03-23 Seismic Window by Jeffrey Saut of Raymond James Equity Research
It is not the threat of earthquakes that keeps me cautious on the stock market. Despite the fact that we still have not had more than three consecutive down days since Sep 1, 2010, and therefore the Buying Stampede remains intact, I can?t shake the feeling it ended on Feb 18. Stampedes (both up and down) typically last 17 ? 25 sessions before they exhaust themselves. Previously the longest stampede chronicled in my notes was a 52-session upside skein, of course that is until the Sep 2010 to Feb 2011 affair, which if ended on Feb 18 was legend at 117 sessions. If not, today is session 137.
2011-03-15 Go Opposite to Hysteria by Jeffrey Saut of Raymond James Equity Research
September 1, 2010 to February 18, 2011 was a pretty good ?year? with the D-J Industrial Average (DJIA) gaining roughly 23.7%. Indeed, the ?buying stampede? that occurred over those months is now legend with today being session 132 without anything more than a one- to three-day pause/correction (recall it takes four consecutive down days to break the back of a buying stampede). Previously, the record stood at 52 sessions, and while the current stampede is not officially over, as stated three weeks ago ? my hunch is it has ended.
2011-03-07 The Philosophy of Tops by Jeffrey Saut of Raymond James Equity Research
This week I am celebrating the two-year anniversary of the stock market's bottom by attending our institutional conference where more than 300 companies will be presenting to nearly 600 portfolio managers. It's a great conference, as well as an appropriate time to reflect on the past 24 months. Recall, the bottoming process began on October 10, 2008 when 93% of the stocks traded on the NYSE recorded new annual low prices. It was then I declared, "The bottoming process has begun."
2011-02-28 Oil that is by Jeffrey Saut of Raymond James Equity Research
?Oil that is, black gold, Texas tea,? Jed Clampett (Buddy Ebsen) got rich in the hit series The Beverly Hillbillies by discovering oil on his property. Similarly, investors have become enriched recently by owning oil stocks. Verily, crude oil has surged from ~$84 per barrel in mid-February into last week?s peak of $103.41 with an ascent for most oil stocks. As stated in Friday?s verbal strategy comments, ?Libya is particularly troubling because I think there is a fifty-fifty chance that Gaddafi, rather than cede power, will begin blowing up Libyan oil pipelines ? it?s either me or chaos.?
2011-02-22 The Clock Has No Hands? by Jeffrey Saut of Raymond James Equity Research
Recently, if you threw a brick out of a Wall Street window, it would go up! This stampede has not given up since it began on September 1. Indeed, the DJIA has not experienced anything more than the perfunctory 1 ? 3 session correction since this stampede began, not giving anyone an easy entry point. I was pretty constructive on stocks until the beginning of this year when I wrong footedly, like my gray-haired lunch friends, turned too cautious. Still, in this business you have to play the odds; and currently I just don?t think the odds are favorable enough to be aggressively bullish.
2011-02-16 The Cocktail Theory by Jeffrey Saut of Raymond James Equity Research
?How can you be sure that the pullback, you have wrongly been expecting, is for buying?? Since 1940 there has never been more than one 10% or greater pullback in a bull move; we had a 17% pullback last year between April?s high into June?s low. Moreover, the retail investor is nowhere close to fully embracing this rally, which is typically what occurs around intermediate/long-term stock market ?tops.?
2011-02-08 'Conversation' by Jeffrey Saut of Raymond James Equity Research
While it?s true the DJIA and SPX have made new reaction highs many indices have not. Many emerging markets are declining, the MACD has been negatively configured since Jan 18th, Lowry?s Buying Power Index is falling and it's Selling Pressure Index is rising, and the 30-year Treasury Bond?s yield is about to break out above a spread triple top. The top gaining sector since November has been the Financials, but in the past few weeks the Financials have weakened noticeably. All of this continues to keep me cautious (but not bearish) as we enter February, a historically down month.
2011-02-01 Contrarians!? by Jeffrey Saut of Raymond James Equity Research
John Templeton once remarked, ?For those properly prepared in advance, a bear market in stocks is not a calamity but an opportunity.? And while I don?t think this is just a counter-trend rally in an ongoing bear market, I continue to believe we are into an uptrend within the context of the wide-swinging trading range stock market we have experienced since the turn of the century.
2011-01-25 'Fear, Hope & Greed' by Jeffrey Saut of Raymond James Equity Research
I believe the evidence for a pullback is mounting. Since September 1, 2010, every time the Russell 2000 (RUT/773.18) has closed below its 20-day moving average (DMA), buyers have showed up the very next day. Not so last week. In fact, last week was the first down week for the SPX in eight weeks as the divergences in the stock market continue to grow. As legendary Dow Theorist Robert Rhea observed, mounting divergences suggest stocks are being distributed (read: sold) by smart money.
2011-01-18 How High is High? (To Whom?) by Jeffrey Saut of Raymond James Equity Research
The current buying stampede is legend with the DJIA experiencing no more than three consecutive days on the downside over the past 93 sessions. This, combined with numerous other negative indicators, continues to leave me cautious in the short-term on both stocks and commodities, but not bearish. As for buy ideas, as stated I do like Tech.
2011-01-13 TW3?! by Jeffrey Saut of Raymond James Equity Research
?That Was The Week That Was,? also known as TW3, was a satirical TV comedy first broadcast on the BBC in November of 1962 and subsequently moved to America. The program was radical in that it chronicled events of the previous week and broke new ground in lampooning the establishment. It was also the first show to demonstrate it was truly television by allowing the cameras and boom microphones to be seen, giving the program an exciting and modern feel. I revisit TW3 this morning because despite last week?s holiday-like environment there were some pretty amazing headlines.
2011-01-04 The White Hurricane by Jeffrey Saut of Raymond James Equity Research
I believe that in the short-term, the odds are not tipped decidedly in investors? favor. The Volatility Index is down to ?complacency levels? last seen in April. Ditto, Investors Intelligence data shows advisory sentiment approaching the bullish extremes of October 07. Meanwhile, stock market leadership is narrowing, internal momentum is waning, and every macro sector except Utilities is overbought. Correlations between various asset classes are decreasing, implying that investors are becoming increasingly selective. All of this suggests more caution is warranted as we enter the new year.
2010-12-27 Lessons by Jeffrey Saut of Raymond James Equity Research
Lessons, I?ve learned a few over my 40 years in this business: A fool and his money are soon parted. There is no free lunch. Don?t put all your eggs in one basket. Spend interest, never principal. You cannot eat relative performance. Don?t be afraid to take a loss. Watch out for fads. Act. Take the long view. Remember the value of common sense.
2010-12-20 Do You . . . Sincerely?! by Jeffrey Saut of Raymond James Equity Research
For themes in 2011, I continue to embrace no double-dip recession, slow economic growth, dividend yield, stuff (energy, agriculture, water, electricity, metals, etc.), emerging/frontier markets and their consumers (although the emerging markets are well overbought currently), technology, financials, active investment management over passive (indexing), and hedging portfolios to reduce the downside risk.
2010-12-13 Dr. Copper by Jeffrey Saut of Raymond James Equity Research
The most important chart patterns of December (at least so far) are the charts of the 10- and 30-year Treasury bonds, whose yields have backed up more than 10% since the end of November (see the first chart on page 3). The second most impressive chart for the month is copper, which is up 10.8%. Copper is often referred to as ?Dr. Copper? for it has a better predictive record on economic growth than many economists; and last week copper came a cropper as it traded to new all-time price highs.
2010-12-06 Festivus by Jeffrey Saut of Raymond James Equity Research
The stock market is once again over bought so it would not surprise me to see a pause and/or pullback in the short-term. Nevertheless, I still expect the trend of buying the ?dips? to continue. Watch the Financials; they may be the key to the stock market?s near-term directionality.
2010-11-29 Ripeness is All by Jeffrey Saut of Raymond James Equity Research
Shakespeare once wrote, ?Ripeness is all.? And timing is ?all? when it comes to Wall Street as any whipsawed investor will tell you.
2010-11-23 They?! by Jeffrey Saut of Raymond James Equity Research
Jeffrey Saut analyzes the DJAI and continuously favors the upside. Thus, he states his longstanding strategy that a "profits boom" will give way to an inventory rebuild, and then a capital expenditure cycle followed by increased hiring, and then a pickup in consumption, remains "stirred," but not shaken. As for the strongest sectors, they remain Energy, Basic Materials, and Information Technology, while the best performing market capitalization class is the mid-caps.
2010-11-09 Everybody?s Happy!? by Jeffrey Saut of Raymond James Equity Research
Over the decades I have come to trust my 'day count' indicator because it has worked so well. Since the late-June ?lows? there have been ten 90% Upside Days, accompanied by strong Advance-Decline readings, reflecting the durability of this rally. In fact, the New York Composite Advance-Decline Line is well above its April rally peak and Lowry?s Buying Power Index has risen to a new rally high, while the Selling Pressure Index tagged a new reaction low, late last week. All of this only reinforces my view that any correction will be shallow and brief.
2010-11-02 It's Not Nice to Fool Mother Nature by Jeffrey Saut of Raymond James Equity Research
With per capita incomes rising rapidly in emerging countries, burgeoning food demand has left global grain consumption exceeding production; over the next few decades the situation is likely to get worse because food production needs to expand by some 50 percent just to meet the estimated demand. This means an additional 6 billion acres of land is needed to meet the upcoming food demand, but only 2 billion acres of good land is available. That should make farmland a good investment, and there are select public companies that play to this theme.
2010-10-25 'Janitor's Job!?' by Jeffrey Saut of Raymond James Equity Research
Eight of the S&P 500's macro sectors are currently overbought. The two that are not, Financials and Telecom, are a neutral value. Meanwhile, 88 percent of the SPX's stocks are above their respective 50-day moving averages. Equity markets are going to reach some kind of trading top over the next few weeks. Any pullback, however, will be a buying opportunity. Therefore, instead of randomly 'buying' right here, Saut prefers to wait and see which stocks resist the envisioned decline.
2010-10-18 'Gone in 60 Seconds' by Jeffrey Saut of Raymond James Equity Research
The likelihood of the QE2 has risen dramatically since Ben Bernanke's Jackson Hole speech. This is being reflected by the 'stubborn rally' in most asset classes. If Bernanke did not think QE2 was needed, he surely would not allow such speculation because he does not want to surprise the various markets. Any ensuing pullback will be mild and contained above the 1130 - 1150 level on the S&P 500. Nevertheless, Jeffrey Saut is cautious, which he has not been since April.
2010-10-11 Shrugging Off Bad News by Jeffrey Saut of Raymond James Equity Research
With more quantitative easing on the way, the risk of another downdraft in housing has been taken off of the table. It has also boosted commodities, which is plainly good for our 'stuff stocks.' Additionally, QE2 should spur more mergers and acquisition activity, increase share repurchases, and lower the U.S. dollar (good for export companies), all of which is positive for the S&P 500.
2010-10-05 'Churn! Churn! Churn!' by Jeffrey Saut of Raymond James Equity Research
Equity markets are churning slightly above their topside 'breakout' levels, having pierced previous reaction highs. That begs the question, 'is this an upside breakout or an upside fake out?' It is indeed an upside breakout, and there should be more upside to come. In fact, if we get through the next few weeks without some kind of major pullback, you are going to start hearing about the strong upside seasonality of November and December.
2010-09-27 'Rules are Rules?!' (An Email From Grandma) by Jeffrey Saut of Raymond James Equity Research
Last week most of the major stock market averages broke out of their May-September trading ranges to new recovery highs (small cap indices did not). While we are not necessarily looking at a repeat of the 2009 stock market rally, the S&P 500's April highs now seem achievable. Meanwhile, the bears continue to growl 'Where's the volume?' The reply to that question is that the whole 2009 rally came on declining volume, as did this year's May mauling, begging the question: Does volume really matter?
2010-09-20 Mr. Energy by Jeffrey Saut of Raymond James Equity Research
According to Dow Theory, the primary trend of the stock market is 'up.' That upward trend would be reconfirmed if the Dow Jones Industrial Average and the Dow Jones Transportation Average break above their respective August 9 closing highs of 10698.75 and 4516.35. Such action would also suggest a run toward the Dow's April 26th closing high of 11205.03. Last week, however, stocks stalled around their August recovery highs. With 75.8 percent of the S&P 500's stocks above their 50-day moving averages, we are currently overbought.
2010-09-13 And a Partridge in a 'Pair' Tree by Jeffrey Saut of Raymond James Equity Research
We've gone from double-dip to double-drip. While the economy is slowing, a slide back into recession is unlikely. Chances of deflation have also deflated. Meanwhile, last week the Labor Day Indicator sounded the 'all clear' signal when the S&P 500 closed higher over the four days following the holiday. Unless the S&P violates its 50-day moving average of 1085, followed by a break of 1060, the path of least resistance for stocks remains up. Still, investors continue to shun stocks, leaving the equity risk premium exceptionally large.
2010-09-07 Mr. Market? by Jeffrey Saut of Raymond James Equity Research
There have been two 90 percent upside days in the past few weeks combined with new highs in Lowry's buying power index and new reaction lows in the selling pressure index. Since 1940 there has never been an instance when such a configuration existed five months into a bear trend; and note that we are now five months from the April highs. Additionally, over the last 16 midterm elections the stock market has never made a new reaction low post-election day. If stocks rally during the week after Labor Day, the odds that the rally will continue are high.
2010-08-31 Boston! by Jeffrey Saut of Raymond James Equity Research
While the various markets can certainly do anything, it's typically not the snake you see that bites you; and currently the media is replete with stories about the Hindenburg Omen. When so many people are asking the same 'Hindenburg Omen' question, it is typically the wrong question. Meanwhile, the equity markets have been see-sawing, buffeted by deflationary worries from the bond market. The counterpoint to those lower bond yields is copper, which has broken out to the upside in the chart, suggesting no economic double-dip.
2010-08-24 Crowded Trade by Jeffrey Saut of Raymond James Equity Research
Equity markets remain mired in a wide-swinging trading range. In such an environment, stock selection, combined with the ability to sell mistakes quickly, should be the key to portfolio performance. There are also reasonable investment alternatives to the sidelines.
2010-08-17 'Promised Land?' by Jeffrey Saut of Raymond James Equity Research
Last week investors gave up on stocks, worried that Wednesday's 90 percent downside day marked the end of the summer rally, and fearing that another big decline was in the offing as we enter the dreaded months of September and October. While statistically those months tend to be the worst of the year, that wasn't the way it played last year, and it is doubtful that it will play out again that way this year. While the equity markets may pull back, none of the characteristics that mark a major 'top' are currently in place.
2010-08-03 'Don't Worry, Be Happy' by Jeffrey Saut of Raymond James Equity Research
Listening to the market is an art, not a science, and Dow Theory is interpreted differently by many practitioners. Nevertheless, evidence suggests that a buy signal has been registered. Three consecutive 100-point up days in the Dow Jones Industrial Average catapulted the Dow above its June closing high of 10450.64 last Monday. Simultaneously, the Dow Jones Transportation Average closed above its June high of 4433.60.
2010-07-20 Don't Bet the Farm! by Jeffrey Saut of Raymond James Equity Research
Following the 90 percent downside days of June 22nd, 24th, and 29th quickly came a 90 percent upside day. On July 13th another 90 percent upside day was registered. Such sequences often mark the beginning of a rally. If so, the bulls' case would be dramatically bolstered with a decisive move above the SPX's 200-DMA at ~1112, with a subsequent confirming upside breakout above the June 21st intra-day reaction high of 1131.23. Until this occurs, Jeffrey Saut is content to remain flat in trading accounts, yet continue to position favorable stocks for investment accounts.
2010-07-12 A Man Lived by the Side of the Road ... by Jeffrey Saut of Raymond James Equity Research
Currently, the question du jour is whether the economy is going to slip back into recession; aka ...the dreaded double-dip. While there is always the chance of a double-dip, they are pretty rare. Interestingly, all three double-dips since 1880 were characterized by a mild first recession followed by a more severe secondary recession. Plainly, what we experienced in the 2007 ? 2009 recession was anything but mild. Accordingly, the odds of another recession are low. There is always the risk, however, that we will 'talk' ourselves into a recession.
2010-07-06 Happy Birthday, America! by Jeffrey Saut of Raymond James Equity Research
Since the 'flash crash' low of May 6, 2010, we have had a Dow Theory 'sell signal' (5-20-10), a sell-signal from my proprietary intermediate trading indicator (the first since December 2007), the monthly stochastic-indicator has turned negative, a downside violation of the 12-month moving average has occurred and most indices have broken below spread triple-bottoms in the charts. Last week we even got a 'death cross' when the S&P 500's 50-day moving average (DMA) crossed below its 200-DMA. All of this suggests that a cautious stance on stocks is warranted.
2010-06-29 'Getting, Keeping, Losing!' by Jeffrey Saut of Raymond James Equity Research
From one main goal, keeping the profits accrued since the March 2009 bottom, springs many daunting questions. Is this a new bull market or a secular bear market? What should one glean from economic reports? What signals should one watch for? Jeffrey Saut explains a quote from _The Slippery Slope of Wealth_ by George Gilder and provides his commentary and call for the week.
2010-06-21 Random Musings From a Summer Vacation by Jeffrey Saut of Raymond James Equity Research
The debate of the day centers on whether what we have experienced since the March 2009 'bottom' is just a rally in an ongoing bear market or the beginning of a new secular bull market. Since the end of 2001, Jeffry Saut has been adamant that there is a secular bull market in 'stuff stocks' (energy, agriculture, metals, water, electricity, cement, etc.), especially 'stuff stocks' with a yield, as well as a bull market in emerging and frontier markets. The rest of his portfolio is geared toward taking advantage of the various mini-bull/bear market 'swings.'
2010-06-02 Be Water, My Friend! by Jeffrey Saut of Raymond James Equity Research
As the old sailor's axiom states, you can't change the direction of the wind, but you can adjust the sails. Clearly, the stock market's 'winds' have been in a downdraft. Last month was the worst May for the S&P 500 since 1962. Granted, the May Melt could have been worse if the SPX had stayed at last Tuesday's low of 1040.78, but most oversold indicators are about as compressed as they ever get. This week markets will have to deal with yet another disappointment after BP's failed top-kill operation in the Gulf. The best strategy now is thus defense, until the 'sell signal' reverses.