Jeffrey Saut recommends a gradual re-accumulation of investments

by Michael Tarsala

One of my weekly reads is always the research commentary from Jeffrey Saut, investment strategist at Raymond James.

He has a great sense of market history, and often takes a contrarian point of view.

You can read his entire commentary here.

This week, his commentary had four key takeaways:

— The AAII investment sentiment survey is at its lowest bullish reading since August 2010 (a bullish contrarian signal).

— Saut thinks a tradable market bottom is likely at hand, based partly on the position of the McClellan Oscillator (see chart below). Readings below 0 are oversold, and it recently reached a reading lower than -100.

— The P/E ratio for the S&P 500 stands at 13.1. There have been only 5 recorded occasions when a bear market began with the S&P 500 trading below a PE ratio of 15.

— Saut thinks a “gradual re-accumulation” of investment positions is the right strategy.