Jeffrey Saut, chief investment strategist at Raymond James, says the market looks vulnerable to a 10%-12% pullback.
In a note posted on the firm’s website yesterday, Saut said:
“Just like our fundamental analysts are making a negative ‘call’ on the PC computer business that fell off a cliff in May/June, I am making a ‘call’ that the current set-up in the equity market is remarkably similar to the summer of 2011 that ushered in an 18% decline. While I do not think any pullback from here will be that severe, I do think we are vulnerable to a 10%-12% decline in the weeks ahead, albeit within the construct of a secular bull market that has years left to run.”
Saut also noted that, while he typically eschews such comparisons, a historical chart of the S&P 500 from the summer of 1965 today could have merit considering the news backdrop of the two periods (Vietnam vs. Middle East).
In a note to clients this morning titled “A 20% Correction? That’s Not What I Said!,” Saut says he fielded calls from portfolio managers and investors wondering if he was really calling for a 20% pullback.
The above quote makes it pretty clear that Saut was not calling for a 20% correction, but that he fielded calls on a misinterpretation is a pretty interesting indication of where investor psychology is right now.
The markets keep grinding higher and people seem desperate for a correction.
Except that’s not what Saut called for.
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