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Maybe A Correction Isn't Coming?

Tuesday, 17 Nov 2009 | 6:35 PM ET

If you’re waiting for a correction, hope you brought a book. You may be waiting for a while.

At least, that’s what Raymond James chief investment office Jeff Saut seems to be suggesting. In an article published onMinyanville Saut makes the case that a correction probably isn’t in the cards, -- at least if history is any indication.

First ,“we just entered the best six months of the year for the equity markets,” he says. (November through April have, on average, shown superior stock market performance )

Second, “over the past 12 years the Dow has always shown a profit between November 11 and December 5.”

But that’s not all. Saut thinks history may be repeating itself – in an even bigger way.

S&P Action Repeating Itself

Since last April Saut has been using the stock market’s chart pattern from 2003 as a template for this rally – and it’s been spot on accurate.

In case you're like us and not immediately familiar with the market action of 2003-- in a nutshell, ”the S&P 500 bottomed in March 2003 and rallied sharply into June,” he says. “From there it flopped/chopped around for a few months, but never gave back much ground.”

Sound familiar? Well guess what, there’s more.

No Correction Ahead?
A look at stocks as they fight higher, with Jeffrey Saut, Raymond James chief investment officer.

“In late 2003 stocks took off on the second leg of the rally, rising into the first quarter of 2004,” he says.

And get this. The first leg of the 2003 rally was driven by liquidity-- much like 2009’s first leg (March to June) – while the second leg of the 2003 rally was driven by improving fundamentals and earnings -- just like 2009’s “July through now” rally.

So how should you be positioned? Before the boradcast Jeff Saut offered the following trades:

-Buy American Superconductor
-Buy Consumer Staples SPDR
-Buy Wal-Mart
-Buy iShares REIT

What’s the bottom line?

The bottom line is get long, says Saut. Whatever the resolution in the short term, we continue to believe the major market indices will trade higher into the first quarter of 2010.

What do you think? We want to know!


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Trader disclosure: On Nov. 17th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (POT), (NUE), (AAPL), (BAC), (EEM), (GE), (INTC); Finerman Owns (FLS); Finerman's Firm Owns (MSFT), (NOK), (PLCE), (TGT), (CBY), (BGC), (WMT); Finerman's Firm Owns (BKS) Puts ; Finerman's Firm Is Short (USO), (IJR), (MDY), (IWM), (UNG), (KFT); Finerman's Firm Owns (BAC) Preferred, (BAC), (BAC) Call Spreads; Finerman Owns (BAC) Preferred, (BAC); Finerman's Firm Owns (FLS), Is Short (FLS) Calls; Finerman's Firm And Finerman Own (WFC) Preferred; Terranova Owns (POT), (SU), (AAPL), (GOOG); Terranova Owns Dec. Crude Oil . Futures; Terranova Owns Dec. Gold Futures; Terranova Owns Dec. Nat Gas Futures; Terranova Works For (VRTS) ; Najarian Owns (ANN) Call Spread; Najarian Owns (DTV) Calls; Najarian Owns (JRE) Calls; Najarian Owns (CLF) & (CLF) Calls ; Najarian Owns (AA) Call Spread; Najarian Owns (EXPE) Calls ; Najarian Owns (GE) Calls ; Najarian Owns (INTC) & (INTC) Calls ; Najarian Owns (LAZ) & short (LAZ) Calls ; Najarian Owns (MCD) Call Spread; Najarian Owns (QLOGIC); Najarian Owns (RIMM) Call Spread; Najarian Owns (YHOO) & (YHOO) Puts

For Nishu Sood
(TOL) Is an Investment Banking Client of Deutsche Bank
Deutsche Bank Owns (RYL)
(RYL) Is an Investment Banking Client of Deutsche Bank
Deutsche Bank Owns (PHM)
(PHM) Is an Investment Banking Client of Deutsche Bank
Deutsche Bank Owns (MTH)
(MTH) Is an Investment Banking Client of Deutsche Bank
Deutsche Bank Owns (MDC)
Deutsche Bank Owns (LEN)
(LEN) Is an Investment Banking Client of Deutsche Bank
Deutsche Bank Owns (KBH)
(KBH) Is an Investment Banking Client of Deutsche Bank

For Jeff Saut
Raymond James Owns (WMT)
Raymond James Received Compensation from (MO)
Raymong James Makes A Market in (AMSC)
Raymond James Received Compensation from (AIV)




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