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Jeffrey Saut: The call for this week

* May 22, 2017

7 come 11

It will be interesting to see if the political brouhaha somewhat abates this week given the president’s speech in Saudi Arabia yesterday. Also arguing for less political infighting is that ex-FBI director Comey cannot readily accuse President Trump of obstruction without incriminating himself, because under the law, Comey was required to notify the DoJ of ANY attempt to obstruct justice. If the political environment softens, it would go a long way in helping this earnings-driven secular bull market. In any event, our work shows that the first part of this week has the potential to be strongly positive for equities. To that point, last week we noted, “The compression of the Bollinger Bands, like our models, are telegraphing the potential for a pickup in volatility, which we think will come on the upside beginning late this week or early the following week (Chart 3 on page 3). Plainly, the Bollinger Bands continued to compress dramatically last week, and in the process, the SPX tested the lower band.

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