A market bottom is forming, and it will lead to new record highs, Wall Street bull Jeff Saut says

Finance news

Long-time bull Jeffrey Saut suggests it could be a less chaotic week for investors.

According to the Raymond James chief investment strategist, last week’s “minicrash” is not indicative of any fundamental changes in the economy or markets, and there’s evidence a market bottom is forming.

“The trading pattern today has been a multiswinging pattern between up and down and that’s usually how bottoms are formed,” he said Monday on CNBC’s “Trading Nation.”

Despite his reassuring read on the market, the Dow and S&P 500 couldn’t muster a close in positive territory. The Dow saw its fourth negative session in five, and the S&P registered its seventh down day in eight.

“It’s just like a heart attack patient doesn’t get right up off the gurney and run the 100-year dash. It needs to convalesce for a few days,” Saut said. “The equity markets are going to do the same thing.”

Saut, who has been touting the merits of the stock market for years, sees almost a decade left in the secular bull market. But that doesn’t mean he hasn’t warned of short-term hiccups, and this latest pullback was no different — except he acknowledges underestimating its magnitude.

“Two weeks ago on Tuesday, our short-term proprietary model flashed a sell signal. We wrote about it. We told people to abandon trading positions,” Saut said.

Now he’s telling clients to start putting money to work again.

“Earnings season is coming up. I think that’s going to be the catalyst for the equity markets to trade back up to new all-time highs,” he said.

Even though his firm doesn’t put out official year-end targets, Saut expects the S&P 500 to exceed 3,000 by the end of the year, about 8.5 percent above the current level.