Uber-bull Jeff Saut says to keep buying, and he would disagree with our recent report on the trebling economic recovery.
The call for this week: Since mid-November the S&P 500 (SPX/1106.41) has tested, and held, the 1085 level four times. Also, since the March “lows” the SPX has ALWAYS found support at the lower Bollinger Band and rallied. Last week both of those levels were “tagged” and successfully “held” (see chart). Moreover, the “tight consolidation” (<2% range) over the past four weeks has allowed our internal energy measuring indicators to reenergize, hopefully setting the stage for a decent rally. Given the aforementioned metrics, as well as the year-end performance anxiety money managers are feeling, we think the SPX is going to break out above the 1115 level so often mentioned in these missives. Reinforcing those views are the good folks at Bespoke who noted, “(While) the pace of economic indicators exceeding expectations has slowed considerably, (last) week saw a reversal in this trend. Of the nine reports released, only two were weaker than expected. If this continues, the odds of breaking out of the recent range to the upside increase considerably.” Obviously, we agree.
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