Despite the recent market volatility that has kept some investors away from stocks, Raymond James’ Jeff Saut has been bullish on ‘select stocks’.
He recently made a non-recession call that has been questioned by many. In a note published yesterday, he explains his rationale (via Market Folly):
“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
For the past three weeks I have likened the current selling stampede to those of October 1978 and October 1979. When studying the charts of those periods one finds said declines came out of the blue on no fundamental news; and while many people have argued there are plenty of fundamental reasons for the current decline, I am not one of them.
…My controversial non-recession “call” is driven by the fact that industry analysts are still bullish on earnings with the S&P 500’s (SPX/1123.53) consensus estimate approaching $114 for 2012. Corporate insiders are clearly bullish as they have been buying their own company’s shares at the highest rate since the bottom in March 2009. Layoffs have slowed and while the economy is certainly
slowing, metrics like L.A. seaport traffic, railcar loadings, etc. are not falling off a cliff like they did prior to the 2008 recession.”
Previously, Saut had bullishly argued about ‘the chasm’ between the stock market and the economy, now he says he isn’t being aggressive with stock recommendations because the Dow Theory “sell signal” worries him.