New market thoughts from Raymond James’ Jeff Saut: “The Twilight Zone?!” 04/11/17

“You’re traveling through another dimension – a dimension not only of sight and sound but of mind. A journey into a wondrous land whose boundaries are that of imagination. That’s a signpost up ahead: your next stop: the Twilight Zone!”
. . . Rod Serling, The Twilight Zone
Back in the early 1960s, there was a TV show called “The Twilight Zone” that we kids would sit around the den and watch every Friday night. Rod Serling always had a prologue to begin each show. While said prologue changed over the years, it originally read, “You’re traveling through another dimension – a dimension not only of sight and sound but of mind. A journey into a wondrous land whose boundaries are that of imagination. That’s a signpost up ahead: your next stop: the Twilight Zone!” (Serling). According to Wikipedia:
The Twilight Zone was an American television anthology series created by Rod Serling. The episodes are in various genres, including psychological horror, fantasy, science fiction, suspense, and psychological thriller, and often conclude with a macabre or unexpected twist, and usually with a moral. A popular series and critical success, it introduced many Americans to science fiction and fantasy tropes.
Unfortunately, that is kind of how we feel about the stock market and the recent series of events. So let’s see, we’ve got multiple terrorist attacks around the world, we’ve launched a U.S. missile strike on Syria, a battle fleet is headed for the Korean peninsula, and the stock market just hangs in there. I have a friend on the battle fleet (the aircraft carrier is called The Carl Vinson), and I have been trying to get in touch with him all to no avail, so the ship must be on “lockdown.” And “lockdown” is what the stock market has been on since mid-February with yesterday being more of the same. Yet, it didn’t start out that way, because the S&P 500 (SPX/2357.16) bolted out of the gate yesterday adding a quick nearly 10 points into around 10:40 a.m. From there, however, rumors surfaced. One was that the Administration had said there would be more Syrian attacks. Another was that there is the possibly of a North Korean missile strike by the U.S. Whatever the reason, stocks stumbled from their 10:40 a.m. peak to an intraday low of ~2351 around the noon hour.
By the closing bell, stocks had again “flat lined.” Of course I was not there to see it, having spent most of yesterday in an airplane on my way to Tennessee. In deconstructing the session’s action last night, Andrew and I find little change in the market’s metrics and, therefore, continue to take a cautious approach on a near/intermediate-term basis. Longer term, we remain steadfastly bullish, believing stocks are not all that expensive. That does not mean we are not doing anything, because we have purchased a few positions over the past few weeks, but we’ve done so very judiciously.
As I write at midnight, the preopening futures are again “flat” as the G7 powers seek broad support to isolate Syria, China orders a fully loaded North Korean fleet of coal freighters to return to North Korea with their coal, and President Trump meets with business leaders to discuss infrastructure and tax reform.

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