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Jeffrey Saut: The call for this week

* October 3, 2016

Patience

So on Friday the Agence France Presse carried a story that the DOJ was close to settling with Deutsche Bank not for the original $14 billion penalty, but for $5.4 billion. Combine that with rumors Germany will not let the bank go under (we have said for months that Angela Merkel would never let a bank with Germany in its name go bankrupt), and the D-J Industrials rallied 165 points helped by the bank and energy stocks. Meanwhile, earnings season is starting and we continue to think earnings will be solid, believing the “profits recession” ended in 2Q of this year. And don’t look now, but Wall Street strategists have been lowering their year-end price targets for the S&P 500 to where it currently changes hands. To that, FundStrat’s Thomas Lee writes, “That’s great news! When market prognosticators predict little or no gain, the S&P 500 has traded higher 12 months later 95% of the time, with an average gain of 11%.” Currently, the SPX has pinched itself into a tight triangle consolidation chart pattern (see chart on page 3). A breakout of that pattern to the upside would suggest an upside test of our 2187 “pivot point.” If the SPX can close above 2187 it will turn our short-term timing models positive, and the forecasted mid/late-September pullback should be over, as the secular bull market continues.

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

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