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Strategist: Stocks Set to Pause, Then Keep Rising


Stocks have been overbought and are set to take a breather before going higher, Raymond James Chief Investment Strategist Jeffrey Saut said Monday on CNBC.

“I think you’re going to pause right here,” he said on “Fast Money.” “We got pretty overbought on the QE3 announcement. Most of the sectors I follow and the New York Stock Exchange McClellan Oscillator got about as overbought as they ever get.

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“You can correct an overbought condition by either going sideways or getting a decent pullback,” he added. “To me, it feels like you’re going to get a sideways correction while the overbought condition is worked off, and then I think we’re going up again.”

Saut said that he had met with several money managers recently, most of whom were underperforming the S&P 500.

“Coming into year-end, you not only have – if you’re underperforming – performance risk,” he said. “You also have bonus risk, and ultimately, you have job risk.”

A pullback in the S&P, he said, would be to the 1,400 to 1,422 level.

Saut offered one stock that he likes: Rayonier, and he said banks were worth a look.

“For the first time in 10 or 12 years, I think you should be in some of the banking issues,” he said. “I think with the real estate market improving, the banks’ balance sheets are in better shape than they’ve been in years. I think you can wade up into some of the financial institutions.”

Trader disclosure: On Sept. 24, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s “Fast Money” were owned by the “Fast Money” traders: Stephen Weiss is long AAPL CALLS; Stephen Weiss is long BBT; Stephen Weiss is long M; Stephen Weiss is short VALE; Stephen Weiss is short AKS; Stephen Weiss is short RIO; Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long SBUX; Stephanie Link is long BRCM; Stephanie Link is long EMC; Steve Grasso is long MSFT; Steve Grasso is long P; Steve Grasso is long QQQ; Steve Grasso is long HPQ; Steve Grasso is long PAY; Steve Grasso is long ZNGA; Steve Grasso is long COH; Steve Grasso is long IP; Steve Grasso is long KSS; Steve Grasso is long VLO; Brian Kelly is long QQQ; Brian Kelly is long GLD; Brian Kelly is long SLV; Brian Kelly is long DAX; Brian Kelly is long CAC 40; Brian Kelly is long DBA; Brian Kelly is long RJA;

For Mark Mahaney
Citigroup Global Markets Inc. and/or its affiliates has a significant financial interest in relation to GOOG
Citigroup Global Markets Inc. and/or its affiliates has a significant financial interest in relation to FB

For Brian Marshall
Neither ISI nor its affiliates beneficially own 1% or more of any class of common equity securities of the subject companies referenced in this Report. No person(s) responsible for preparing this report or a member of his/her household serve as an officer, director or advisory board member of any of the subject companies.
Neither ISI nor its affiliates have any investment banking or market making operations. At various times these reports mention clients of ISI from whom ISI has received non-investment banking securities related compensation in the past 12 months: AAPL.

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