One of Wall Street’s biggest bulls expects another market breakout.
Capital Wealth Planning’s Jeff Saut sees the S&P 500 hitting 4,000 before year-end — a 10% gain from Friday’s close and an 83% gain from the March 23 low.
“Earnings are going to continue to come in better than most people think,” the firm’s advisory board member and market strategist told CNBC’s “Trading Nation” last week.
Despite the S&P 500 and Dow‘s all-time highs, Saut considers this the most hated bull market he’s ever seen.
“Most individual investors — they’re scared to death, and they’re sitting on way too much cash,” said Saut, who also runs market analytics firm Saut Strategy. “They’re going to be forced to pay up in this strongest seasonal period of the time between Thanksgiving and New Year’s.”
According to Saut, the S&P 500’s record run is relative to the market breakouts between 1949 to 1966 and notably 1982 to 2000, the period which included the 1987 crash.
“It’s interesting to me when we had that 37%, 38% pullback [this year,] a bunch of bears came out of the woodwork, and said… ‘we’re in a bear market,’ and they obviously don’t know what a secular bull market is,” said Saut. “The primary trend of this market has been up since March of ’09.”
In 1995, Saut notes the S&P continued to push through resistance even when investors thought there was little gas left. According to Saut, it marked the index’s greatest five year run in history. He believes history could repeat itself because there are few imminent dangers.
“The biggest risk for the market would be a geopolitical event like a nuclear incident with North Korea. Second on my list would be a policy mistake out of Washington,” said Saut, who’s been on Wall Street for more than five decades. “But I don’t see either one of those occurring.”
Absent from his list: The coronavirus pandemic as a top market risk.
“It’s a mistake to try to trade the wiggles here. I think the most important thing in a secular bull market is not to lose your stock positions,” Saut said. “We have at least another four-plus years left in this and nobody believes it.”