The latest from Raymond James’ Jeff Saut, whose note is simply titled “worried”:
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 wasn’t 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 Street’s focus. Worth noting is that of the 31 companies that reported last week, 74% of them beat estimates. Unfortunately, 15 of those “beating companies” rallied, while 17 declined. Still, if the number of earnings “beats” continues, it should provide some kind of downside cushion for equities, provided the debt ceiling “thing” is resolved. Also of note is that there are a host of technical “timing points” due this week. Accordingly, while we are disappointed, we have not given up on our bullish “call,” at least not yet. That could change, however, if the SPX breaks back below 1295.