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Market Top Is in, Brace for Correction: Jeff Saut

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For months Breakout regular Jeff Saut, chief investment strategist at Raymond James, told viewers he was looking for a top sometime around the middle of July. Specifically Saut told us on July 1st that he believed the stocks would eclipse what was then their all-time high of 1,687 before rolling over as we neared the inevitable drama of a Washington sequestration debate.

That being the case it comes as some surprise that his longstanding top call has gotten so much national attention. From Business Insider to CNBC and all points in between Saut's top call has already become something of a legend. For the record, Saut made his call at 1,692 and he said he was looking for a 10-12% correction, not the end of the bull market.

"Between mid-July and mid-August I think the markets are vulnerable to the first meaningful pullback of the year, " says Saut in the attached video. "That said, confidence remains high that we are in the midst of a secular bull market that has many years yet to run."

Beyond an extended run that's taken stocks 18% higher in 2013, Saut says the technical picture is eroding, the economic data is flagging, stocks are in a seasonally weak period, and there's a slew of economic data still to come this week that he expects to be weak.

As much as anything else Saut thinks investors could stand to be shaken out of their complacency. "Everybody's been conditioned to buy the dips and it's been working," he explains, "I think one time it won't work and that's going to cause a lot of hot money to flee on a short term trading basis."

The context is important. Saut is making a trading call, not an investment play. For investors with a longer time frame and buy-and-hold mentality, doing nothing is a viable option. On the other hand if you've been stuck on the sidelines waiting for a chance to put money to work, Jeff Saut says you're likely to get an opportunity to do so at lower prices over the next few weeks.

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