ANOTHER VIEW

The markets continue to be very volatile as the morning strength was immediately sold. The market internals told the story as they never confirmed the early index strength.

However, some interesting morning commentary from the terrific Raymond James strategist
Jeff Saut and republished at minyanville.com:


"Well, it is day 22 in the envisioned 17- to 25-session selling-squall and we think the equity markets are attempting to bottom. By our pencil the Federal Reserve news is past its emotional bearish-peak given Ben Bernanke’s “Dr. Jekyll / Mr. Hyde” switcheroo (aka, dove to hawk). That sense was reinforced last week when the 20-year T’Bond broke out to the upside, suggesting lower interest rates. As well, we think the geopolitical emotional bearish-peak is behind us with the “let’s make friends” Iranian proposal, combined with the Zarqawi “bombshell,” so the only item left in the typical bottoming sequence is a “body” . . . hello Long Term Capital Management! Hopefully a “body” will surface this week concurrent with either a successful retest of last week’s lows (SPX 1235; DJIA 10757; NDX 1526; etc.), or even better, lower lows driven by MUCH higher than expected inflation figures this week. In any event, like last October, we have pulled our “buy list” together and are pretty “thrilled” about being able to become an aggressive buyer of stocks again after being pretty cautious since mid-January."

Jeff also had the this little tidbit:

"If inflation worries are the causa proxima for the equity markets’ demise, why are commodities crashing (inflation should be good for commodities) and why are bonds (TLT) rallying (inflation should be bad for bonds)?”

My take is simple. I prefer to trade on Jeff's side.