Jeff Saut A Buyer of Select Equities During Weakness ~ market folly

Tuesday, August 9, 2011

Jeff Saut A Buyer of Select Equities During Weakness

Back in July, market strategist Jeff Saut was worried about market action and rightfully so. This time around, he makes two major points in his latest commentary:

1. The Dow Theory sell signal that was registered last week is concerning.

2. Stocks are ridiculously oversold and surely a relief rally is in sight?

With those conflicting viewpoints, which side did he take? Well, he has concluded that buying *select* equities makes sense here. Why?

Saut backs up his decision by rattling off points such as: "there is no economic evidence the country is sliding into recession -- slow growth, yes; recession, no. That view is reinforced by the Yield Curve, which has been one of the most reliable predictors of recessions. To wit, every recession for the past 50 years has been preceded by an inverted Yield Curve (short-term interest rates above long-term interest rates). Currently, the Yield Curve is very steeply sloped."

The market strategist also moves on to highlight that 68% of companies beat revenue estimates during the recent earnings season. He is looking for a reflex rally off the massively oversold conditions. During this theorized rally, he instructs readers to 'prune' portfolios of underperforming stocks.

The only question we're left with is which *select* stocks is Saut referring to? He advocates buying "fundamentally sound stocks with decent dividend yields." And even though this list is from May, here are Saut's favorite investment ideas. Do with that what you will.

Embedded below is Jeff Saut's latest market commentary:

You can download a .pdf copy here.

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