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SAUT: THIS PRICE ACTION IS NOT CONSISTENT WITH A NEW BEAR MARKET

Jeff Saut is not convinced that a new bear market is on the horizon. Saut highlights recent market action and some historical technical analysis to back up his point:

“Last Friday, however, the negative nabobs again came out of the woodwork emboldened by the egregious employment report. Nevertheless, Friday’s selling was contained, leaving the DJIA down only 21-points for the session after being down 159-points at 11:00 a.m. That price action is consistent with my sense that selling will not gain much traction. Reinforcing that view: the NYSE Advance/Decline Line has traded to a new high, stocks making new 52-week highs are substantially above stocks making new 52-week lows, Lowry’s Buying Power Index remains in an uptrend while Lowry’s Selling Pressure Index tagged a new low reading last week, credit spreads have been narrowing, the Volatility Index is retreating, and the bullish list goes on. Such metrics are inconsistent with the onset of a new bear market. As the Lowry’s service writes, “In Lowry’s 77 year history there has never been an instance, at this early stage of a new bear market, where Buying Power was at a new rally high and Selling Pressure at a new reaction low.” Plainly, I agree.”

Source: Raymond James

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