Fin - Breakout - US

Jeff Saut: Watch These S&P 500 Levels

Jeff Macke

"Chief investment strategist" can mean a lot of different things, many of which boil down to: "No actionable opinions."

Not so with Raymond James' Jeff Saut. I've personally known and followed his work for years. He's made me money with any number of calls, most recently with his call to overweight the energy sector in massive size last August. Past performance obviously doesn't predict future results, of course, but Saut's track record -- which spans some 40 years on Wall Street -- warrants attention.

While by no means a bear, Saut sees the S&P 500 capped by the widely watched 1,344 level in the very near term. He'd be concerned with a drop below 1,320, but only for the very short term. Below that, Saut views 1,300 as "huge support." However, he's more sanguine than most in the broader market, provided we don't see "crude at $200" or some other outlying event.

He views oil prices as being at or close to an "inflection point" in terms of the current rally, but he says "the days of cheap energy are in the rear-view."

Saut is still looking for uncrowded places to invest with his current picks, and he's loading up on the financial sector, with a focus on smaller banks. He notes that the balance sheets look good and dividends are attractive, which tells him that managers are comfortable with their business and liquidity -- a notable change from the recent past. He continues to purchase and has a strong buy rating on IberiaBank (IBKC), saying he likes the 2.3% yield and that he sees the improving prospects of the bank's core customer base as another selling point.

I'm putting a special "Breakout Strong Watch" recommendation on the above video -- and the body of work produced by Saut.

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