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.


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Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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