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Jeffrey Saut: The call for this week

* October 17, 2016

It’s someone else’s money

Since the sideways trading range in the S&P 500 began in mid-July, our Buying Power Index has weakened by 41 points. During the same period, our Selling Pressure Index has increased by a relatively minor 17 points – far short of the intense selling needed to turn the Advance-Decline Lines sharply lower, in order to warn of an impending major market decline (chart 4). Therefore, a short term correction may be needed to revitalize investor Demand. However, over the past 90 years, with few exceptions, major bear markets have been preceded by a contraction in the Advance-Decline Line lasting for a period of at least four to six months before the S&P 500 Index reaches its final bull market high. Thus, while portfolio holdings should be given extra scrutiny, it still appears to be too early to abandon all equities.

http://www.raymondjames.com/inv_strat.htm

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