Jeff Saut: Weekly

from Raymond James weekly commentary
Jeff Saut is always worth reading.

The call for this week: Last week the D-J Transportation Average (TRAN/3137.76) rallied to a new reaction high. Unfortunately, the D-J Industrial Average (INDU/8076.26) did not. Whether this upside non-confirmation is meaningful remains to be seen, but at session 35 in the upside skein we are pretty cautious. Moreover, as the astute Dines Letter observes, “April has been a month with a pivotal reversal of the March trend 67% of the time since 1963; and, at least a semi-important Top has been reached in virtually every April or May since then.” Consequently, while we don’t think the old stock market “saw” of “sell in May and go away” is going to play in 2009, we do believe the trick from here is harvesting trading profits and hedging some of your investment positions using various option strategies. As for that piece of bad news that comes out of nowhere, which breaks the back of the buying stampede, that we have been warning about. Well, we may have just gotten it – swine flu.