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Jeff Saut of Raymond James sees little downside risk in equities at this level.  Mr. Saut believes we’re likely to continue trending higher:

“According to Dow Theory, the primary trend of the stock market is “up.” That upward trend would be reconfirmed if the D-J Industrial Average (INDU/10607.85), and the D-J Transportation Average (TRAN/4433.66), break above their respective August 9th closing highs of 10698.75 and 4516.35. Such action would also suggest a run toward the Dow’s April 26th closing high of 11205.03. Last week, however, stocks stalled around their August recovery highs. For readers of these comments that should come as no surprise given my very short-term concerns that with 75.8% of the S&P 500’s stocks above their 50-day moving averages (DMAs) we are currently pretty overbought. Then too, we are at the top of the Bollinger Bands that have contained all rallies for the past year, as can be seen in the nearby chart. Still, as repeatedly stated, I don’t think any selling will gain much downside traction, leading to a re-rally that will carry the major averages above their August highs. Reinforcing that view is my proprietary intermediate-term trading indicator, which is trying to turn “green” after being in a cautionary “red” mode since the first week of last May (see chart). Interestingly, despite last week’s wimpy trading pattern, the Telecommunication Services Sector, and the Consumer Discretionary Sector, both broke out to the upside in the charts (read: no double-dip). And don’t look now, but also breaking out to the upside in the charts was our long-standing bullish positions in the precious metals complex despite China’s currency, the renminbi, trading to new all-time highs versus the U.S. Dollar. Indeed, curiouser and curiouser . . .”

Source: Raymond James

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