market folly

Given the recent volatility in the markets, we thought it'd be worthwhile to check in with strategist Jeff Saut to get his thoughts on the action.  We've pointed out how Saut's been cautious leading up to the recent decline, but what's he advocating now?

In his latest investment strategy note, he highlights numerous contrarian signals as reasons to step back into stocks.  First, he points out that the CBOE Equity put/call ratio is flashing a buy signal "that has proven profitable at every downside inflection point since 1994." 

Second, Saut draws attention to the American Association of Individual Investors (AAII) survey, which recorded its lowest bullish reading (23.6% bulls) since August 2010. 

Lastly, Saut highlights that major indexes have been down 13 out of the last 14 sessions.  He says that, "such downside skeins are at historic proportions since markets tend not to go more than 11 sessions in any one direction."

Simply put, Saut says it's time to bring out the 'buy list' and to begin "judiciously recommitting some of that cash to stocks."  It appears as though he's advocating a gradual deployment of capital over time.

Embedded below is Saut's latest market commentary:




You can download a .pdf copy here.

For more from this strategist, head to Jeff Saut on risk management.