Raymond James strategist Jeffrey Saut isn’t letting last week’s move down push him off his bullish perch:
The call for this week: When the going gets tough the tough go on the road. That’s what we did last week and that’s what we are doing again this week, so once again these will likely be the last strategy comments of the week. Nevertheless, last week’s “wilt” left everything we follow lower except for the U.S. Dollar Index. And while the DJIA (9712.73) averted a loss in October, none of the other indices we monitor did. Indeed, the S&P 500 (SPX/1036.19) slid 3.9%, bringing its two-week retreat to 5.6%. While our sense is that we are into a secondary correction, our proprietary overbought/oversold indicator is VERY oversold and the number of S&P 500 stocks that are above their 50-DMAs has fallen from more than 90% to 33.2%. Consequently, we continue to think it is a mistake to get too bearish. Ergo, until Dow Theory “tells us” otherwise, we think the primary trend remains UP, and we continue to trade, and invest, accordingly.