(Bloomberg) -- Secular bull market apostle Jeffrey Saut is worried about a short-term correction in U.S. equities.
Stocks look overbought, trading at extended levels above their 200-day moving averages amid “hugely bullish” sentiment, the former chief investment strategist at Raymond James wrote in a note to clients Monday. Meanwhile, stock market breadth continues to weaken, despite new highs in benchmarks, he said.
That suggests a “typical” pull back of 5%-10% is a possibility, he said.
“There are times to play hard and there are times to not play so hard,” wrote Saut, whose notes regularly feature the view that U.S. equities are in a long-term secular bull market. “We think stocks on a trading basis are near a short-term peak and we are not playing very hard.”
The stock market veteran, who formed Saut Strategy LLC when he retired from Raymond James last year, also warned of the potential for a “meaningful decline” in U.S. equities back in February, based on a cluster of technical signals. The S&P 500 fell over 8% that month, before plunging over 12% in March amid the spreading coronavirus.
Still, any sell-off should be seen as a buying opportunity, suggested Saut.
“This has nothing to do with our long-term view that the secular bull market has years left to run,” he said.
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