Market strategist Jeff Saut is out with his latest commentary and begins with a focus on oil. Unrest in the Middle East has caused prices of black gold to surge from $84 to over $100 per barrel and this is worth keeping an eye on. Turning to his latest stance on the stock market, he thinks the correction is not yet over, even after last week's selloff.
The recent stock 'high' was accompanied by the most bullish stock sentiment since the DJIA's peak in October 2007 (69% 'Bulls' according to Market Vane); as well, the Volatility Index (VIX/19.22) recorded its lowest reading since the summer of 2007 (read: too much complacency). Ladies and gentlemen, it is rare to see those kind of extreme readings worked off in a mere three sessions. So yeah, I believe the correction has more to run, yet I continue to think it is a mistake to become too bearish
As such, Saut has gradually begun to put money to work in stocks during the pullback. He sees the intermediate trend as up and thinks you should buy stocks on your watchlist during further selloffs.
He points to his own watchlist and highlights some of the stocks that have held up best like Skyworks Solutions (NASDAQ:SWKS), Stanley Black & Decker (NYSE:SWK), Tempur Pedic (NYSE:TPX), and Williams Companies (NYSE:WMB). For the investment thesis on WMB and to see why hedge funds have been buying, we featured the stock in the equity analysis section of the new issue of our Hedge Fund Wisdom newsletter that was just released.
You can download a .pdf copy of Saut's strategy here.