Saut: Look for stocks to march higher

Investors should look for upside in stocks beginning this week, strategist Jeffrey Saut said Tuesday.

The S&P 500 ended February down 0.42 percent, extending a three-month losing streak in its worst start to a year since 2009. The Dow closed the month slightly higher, up 0.3 percent.

"I think you put in a double bottom in the stock market," Saut said, referring to the Feb. 11 low.

"We had a 7 percent rally off of that low, and that used up a lot of the market's internal energy," Raymond James' chief investment strategist added in an interview on CNBC's "Squawk Box."

Raymond James is now looking for the market to rebuild its energy in the first week of March, Saut said.

"I think you're starting to take another stab on the upside," he said.

U.S. stock futures pointed to a higher open on Tuesday.

In December, Saut forecast a "rip your face off-type rally" that failed to happen. He attributed the failed forecast to the expiration of $1.2 trillion worth of options and futures, which he said destroyed the market's rhythm.

Earlier last year, Saut accurately called a market bottom during August's sell-off.

If the S&P breaks out of the 1,812 to 1,950 range, the next target area becomes 2,000 to 2,040, he said.

Saut said he expects inflation to pick up and corporate earnings to do "just fine." In this environment, stocks are not that expensive, except when viewed through cyclically adjusted price-to-earnings ratios, he added.

In particular, Saut said large-cap stocks are cheaper than equities in the small-cap complex. He also believes the dollar index — but not the trade-weighted dollar — has peaked, and investors should expect a lower greenback.

— CNBC's Matthew Belvedere contributed to this story.