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Results 401–450
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Down the Rabbit Hole
by Jeffrey Saut of Raymond James,
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%
Ouch
by Jeffrey Saut of Raymond James,
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.
There You Go Again
by Jeffrey Saut of Raymond James,
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.
Efficient Markets?!
by Jeffrey Saut of Raymond James,
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.
A Few of My Favorite Things
by Jeffrey Saut of Raymond James,
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.
Plantar Fasciitis?
by Jeffrey Saut of Raymond James,
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.
Me, Lord Marlboro and the Dow!?
by Jeffrey Saut of Raymond James,
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.
Lucky People
by Jeffrey Saut of Raymond James,
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.
Rude Crude
by Jeffrey Saut of Raymond James,
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).
Gangs of New York
by Jeffrey Saut of Raymond James,
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.
The Return of the Carry Trade?!
by Jeffrey Saut of Raymond James,
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.
Shad Rowe?!
by Jeffrey Saut of Raymond James,
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.
Be Conservative, Not Conventional
by Jeffrey Saut of Raymond James,
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.
Seismic Window
by Jeffrey Saut of Raymond James,
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.
Go Opposite to Hysteria
by Jeffrey Saut of Raymond James,
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.
The Philosophy of Tops
by Jeffrey Saut of Raymond James,
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."
Oil that is
by Jeffrey Saut of Raymond James,
?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.?
The Clock Has No Hands?
by Jeffrey Saut of Raymond James,
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.
The Cocktail Theory
by Jeffrey Saut of Raymond James,
?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.?
'Conversation'
by Jeffrey Saut of Raymond James,
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.
Contrarians!?
by Jeffrey Saut of Raymond James,
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.
'Fear, Hope & Greed'
by Jeffrey Saut of Raymond James,
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.
How High is High? (To Whom?)
by Jeffrey Saut of Raymond James,
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.
TW3?!
by Jeffrey Saut of Raymond James,
?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.
The White Hurricane
by Jeffrey Saut of Raymond James,
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.
Lessons
by Jeffrey Saut of Raymond James,
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.
Do You . . . Sincerely?!
by Jeffrey Saut of Raymond James,
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.
Dr. Copper
by Jeffrey Saut of Raymond James,
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.
Festivus
by Jeffrey Saut of Raymond James,
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.
They?!
by Jeffrey Saut of Raymond James,
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.
Everybody?s Happy!?
by Jeffrey Saut of Raymond James,
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.
It's Not Nice to Fool Mother Nature
by Jeffrey Saut of Raymond James,
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.
'Janitor's Job!?'
by Jeffrey Saut of Raymond James,
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.
'Gone in 60 Seconds'
by Jeffrey Saut of Raymond James,
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.
Shrugging Off Bad News
by Jeffrey Saut of Raymond James,
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.
'Churn! Churn! Churn!'
by Jeffrey Saut of Raymond James,
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.
'Rules are Rules?!' (An Email From Grandma)
by Jeffrey Saut of Raymond James,
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?
Mr. Energy
by Jeffrey Saut of Raymond James,
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.
And a Partridge in a 'Pair' Tree
by Jeffrey Saut of Raymond James,
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.
Mr. Market?
by Jeffrey Saut of Raymond James,
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.
Boston!
by Jeffrey Saut of Raymond James,
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.
Crowded Trade
by Jeffrey Saut of Raymond James,
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.
'Promised Land?'
by Jeffrey Saut of Raymond James,
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.
'Don't Worry, Be Happy'
by Jeffrey Saut of Raymond James,
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.
Don't Bet the Farm!
by Jeffrey Saut of Raymond James,
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.
A Man Lived by the Side of the Road ...
by Jeffrey Saut of Raymond James,
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.
Happy Birthday, America!
by Jeffrey Saut of Raymond James,
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.
'Getting, Keeping, Losing!'
by Jeffrey Saut of Raymond James,
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.
Random Musings From a Summer Vacation
by Jeffrey Saut of Raymond James,
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.'
Results 401–450
of 451 found.
