SAUT: 4 REASONS TO EXPECT A SANTA CLAUS RALLY
Jeff Saut, Chief Investment Strategist at Raymond James, says the rally is done yet. Saut offers 4 reasons why the path of least resistance is up:
“The call for this week: December has been the best performing month of the year over the past 100 years with positive returns 73% of the time. And while last week’s 7.39% romp (basis the SPX) will likely not be duplicated quickly, the path of least resistance remains “up” according to our work (as an aside, the real winner of the week was the Russell 2000, which was up 10.08% last week, while Natural Gas rallied 11.63%). That said, while the DJIA bettered its 200-day moving average (DMA @11946.18) last week, the SPX and D-J Transportation Index did not. Consequently, a divergence currently exists that could lead to some sort of pause and/or pullback. Therefore, look for opening strength this morning followed by attempts to sell stocks back down with the final hour being a toss-up. Still, with improving economic numbers (see the second chart on page 3), the potential for positive news out of the aforementioned trifecta, a profoundly underinvested “crowd,” and the upside seasonal bias, pullbacks should be contained and the upside should continue to be favored.”
Source: Raymond James
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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He expands on that in this video. Worth a view. http://finance.yahoo.com/blogs/breakout/6-reasons-believe-santa-claus-rally-164110003.html
Instead of relying so much in worthless anecdotal statistics, Saut could simply have used a “don’t fight the FED argument”, i.e., twisted ZIRP, the coordinated liquidity move last week, and the highly advertised coming of our lord QE3.
‘The highly advertised coming of our lord QE3′ will only be fulfilled if and when stocks plummet. I mean without getting their strings jerked by Goldman and the gang, how else will these Fed governors know what to do?
So servile have our policy-makers become that they can’t even allow a normal market puke to take place without rushing to offer Mr Creosote another course. Shameful.
http://www.youtube.com/watch?v=rXH_12QWWg8
Question is, are we approaching time for the ‘waffer-thin mint’?
Good point. Don’t get me wrong, I am 50% short via 1250 sp500 January puts I bought at the high yesterday. I was just trying to say that there are much better ways to fool the crowd than Saut’s mediocre shot.
So far, since 11/25, both Jeff Saut and Cullen have been exactly right about the “face-ripping” rally that has been taking place. And if we get a very positive announcement from Europe on 12/9, that should be good for another 15 to 20 points added to the S & P 500 level, probably putting it over the 200 day moving average. Any of you bears out there may have to be very patient, as it will take awhile for all the austerity measures in Europe to have their recessionary impact. It could take two to four weeks at least before the bullish tide turns.
Larry, if Tom DeMark is right this mother is going to top out by Christmas. At that stage not only will his short, medium and long term signals be bearish, some monster-sized Elliot waves will be poised to turn south. So yes, I can be patient.
He forgot reason #5: it’s a cliche.