×

The S&P has reached a ‘buying climax,’ strategist Jeff Saut says

After a major breakout, the S&P 500 has experienced a "buying climax," according to Jeffrey Saut, chief investment strategist at Raymond James.

But he believes that after a brief refractory period, the bull run will resume.

A "buying climax" refers to a sharp increase in price accompanied by heavy volume that is then followed by a slip, which is just what happened last week.

"What it suggests is that the demand for stocks has waned in the short run, and it either causes the S&P to pause or to have an attempt at a pullback," the strategist said Monday on CNBC's "Trading Nation."

But even though he diagnoses "the near-term exhaustion of demand," Saut still sees the bright side of the climax.

"Buying climaxes tend to happen in bull markets," he said. "And I continue to think we're in a secular bull market — and those typically last 14 or 15 years. We're just about 7½ years into this one, so I think we've got years left to go."

He said an improving earnings picture should serve as a major tailwind for the market.

In other words, while stock may need a bit of time to rest in the short term, for Saut, the long-term picture still remains very constructive.


Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

Read more

Connect