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>>> The call for this week <<<
By: Jeffrey Saut | October 9, 2017

The major indices look pretty extended on a trading basis, however the international markets are not, and have actually rallied as much as the SPX year-to-date (Chart 5). Amazingly, this “melt up” has not been accompanied by even one 90% Upside Day where 90% of the total volume, and total points traded, come in on the upside. Worth mentioning is that last week the Buying Power Index crossed above the Selling Pressure Index suggesting the stock market should be higher in the months ahead even if we do get a pause and/or pullback in the near term. As our pal Doug Kass writes:

We can say nothing other than the fact that stocks continue to rise despite any and all sorts of measurements of “over-bought-ness” that one might wish to conjure up. We are a broken record of repetition, noting that P/Es are egregiously high; that price/book value ratios are egregiously high; that margin usage is egregiously high and that the CNN Fear & Greed Index is at its highest levels in the past decade . . . but it matters not; stocks just continue to advance. . . . We shall simply note once again that this remains a bull market and that one has no choice but to remain long of equities on balance; however as we have said countless times it seems to us, one needn’t . . . and indeed shouldn’t . . . be aggressively long. Modestly long seems to be the order of the day.
To which we add the famous quote from Sir Isaac Newton after he lost the equivalent of $2.7 million in today’s inflation adjusted dollars in the South Seas stock bubble (1720s), “I can calculate the motion of the heavenly bodies, but not the madness of people!”

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