With the dollar surging and gold and crude oil weaker, today King World News is featuring a piece from one of the greats in the business discussing the large amount of fear that investors have about the current state of affairs and most importantly, how the good times will end.
By Jeffrey Saut, Chief Investment Strategist at Raymond James
June 11 (King World News) – Since last Friday we have been enjoying a villa at Amelia Island, Florida. It was Cheryl's and my 45th wedding anniversary. The first three days were great, but on Monday and Tuesday I had to work. That "work" consisted of speaking at five different seminars for our Raymond James offices, and our advisors/clients, in and around the Jacksonville, Ponte Vedra and Saint Augustine areas.
All the presentations went well, but the reoccurring theme among the individual investors was best described by this email from one of our Financial Advisors (FAs). It read, "The client event last evening was a terrific event and provided great insight into the markets, investment climate and longer term outlook. As you are aware most of our clients are pretty concerned about the future of our markets and the economy – I see a lot of pessimism out there when I talk to clients – they are frightened! You did a great job of getting them to think beyond the overwhelming cynicism out there and focusing on where the opportunities are. Thank you for a great presentation!"
This Is How It Will End
"They are frightened" is clearly the operative phrase because I have heard that at just about every presentation I have done since the bottom in March of 2009. I would add that secular bull markets do not end with such worries. They always end with euphoria, which can be seen in the nearby chart showing the life cycle of a secular bull market. I think we are currently only between Hope and Relief with Optimism, Excitement, Thrill, and Euphoria yet to come before this secular bull is over.
Speaking to worries, participants were pretty worried when the S&P 500 (SPX/2105.20) knifed through the major support level of 2090 – 2100 on Monday with a downside follow-through on Tuesday to ~2072. The only thing to be viewed as a positive was the quote we used in Tuesday's Morning Tack from our friend Jason Goepfert, of the invaluable SentimenTrader website, that read:
"Monday marked the 10th time during this bull market that the S&P 500 fell from a recent high to below its 100-day moving average. All 10 times, stocks rebounded over the next 1-2 days. Seven of those times, it marked the low for months. When the market's rebound was meek, it led to some further losses. This is worth paying attention to as a potential change in character, and a less inviting market environment for long positions on a longer time frame."
Certainly, yesterday's 25 point rebound in the SPX was not meek and is in keeping with the historic precedent. Other reasons offered for Wednesday's Win ranged from crude oil's rebound, the FERC ruling on utility companies, the oversold condition, strength in the banks, the Transports' upside reversal, and fewer Greece worries. Today we find out if it was just a one-day wonder, or something more. ***ALSO JUST RELEASED: Global Elite Moving To Make Human Beings Obsolete CLICK HERE.
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