Secular bull market apostle Jeffrey Saut is worried about a short-term correction in U.S. equities.
Stocks look overbought, trading at extended levels above their 200-day moving averages amid “hugely bullish” sentiment, the former chief investment strategist at Raymond James wrote in a note to clients Monday. Meanwhile, stock market breadth continues to weaken, despite new highs in benchmarks, he said.
That suggests a “typical” pull back of 5%-10% is a possibility, he said.
“There are times to play hard and there are times to not play so hard,” wrote Saut, whose notes regularly feature the view that U.S. equities are in a long-term secular bull market. “We think stocks on a trading basis are near a short-term peak and we are not playing very hard.”
The stock market veteran, who formed Saut Strategy LLC when heretired from Raymond James last year, alsowarned of the potential for a “meaningful decline” in U.S. equities back in February, based on a cluster of technical signals. The S&P 500 fell over 8% that month, before plunging over 12% in March amid the spreading coronavirus.
Still, any sell-off should be seen as a buying opportunity, suggested Saut.
“This has nothing to do with our long-term view that the secular bull market has years left to run,” he said.
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