market folly

Market strategist Jeff Saut's latest commentary is entitled "Mood", referring to the market's mood of course.  Saut states something quite obvious but often overlooked by investors:  "Importantly, market mood frequently sets the near-term trend."

Saut points to the recent action in the market as encouraging, as the recent rally has been the first time the market has ignored bad news in two months.  In terms of technical support levels, he says to watch the 1330-1340 level to see if the market will continue to ignore bad news.

Lastly, it's interesting to see Saut mention how he treats position sizing as well as profit-taking and loss prevention.  He likes to sell 25-33% of a position if it is up 100% and if something goes against him by 15-20% he likes to either hedge, sell some, collar, etc.  We've previously highlighted Saut's approach to risk management.

He prudently observes: "Indeed, avoiding the big loss is the key to better returns in the markets."

Embedded below is Jeff Saut's latest market commentary:



You can download a .pdf copy here.

For more from this strategist, head to Saut on investor sentiment.