The massive market moves are a sign it has probably hit bottom, noted strategist Jeff Saut told CNBC on Friday.
The Dow Jones Industrial Average jumped more than 700 points Friday after a blow-out jobs report and comments from Federal Reserve Chairman Jerome Powell that soothed investors. The market action followed a sharp down day Thursday that saw the Dow closing more than 600 points lower.
“Usually when you get big moves like this on the upside and downside you are either near a top or you’re near a bottom. And after a near 20 percent decline, I think we’re at a bottom,” said Saut, chief investment strategist at Raymond James.
The market’s wild ride began in 2018, with sell-offs late in the year. In December, the Dow posted its worst December performance since 1931. The blue-chip index also had its biggest ever single-day point gain on Dec. 26 when it soared 1,000 points.
Ultimately, both the Dow and the S&P 500 ended the year down 5.6 percent and 6.2 percent, respectively. It was their biggest annual losses since 2008.
Saut told “Closing Bell” that the selling was due to a variety of reasons, including hedge fund selling, liquidation of exchange-traded funds, mutual fund redemptions and tax law selling.
However, there were no buyers around, he said, noting that many of the portfolio managers he speaks to were gone for most of December.
“The sellers were selling into a vacuum,” Saut said. “That vacuum got filled up today, as matter of fact.”
In addition to the good news about jobs and Powell saying the Fed will be patient in raising rates, Saut thinks there may be a solution to the U.S.-China trade war. On Friday, China’s Commerce Ministry said the two nations will hold vice ministerial-level trade talks in Beijing on Jan. 7-8.
Right now, there are two groups Saut really likes: financials, because they are “really cheap” and the “beaten-up energy theme.”
— CNBC’s Fred Imbert and Reuters contributed to this report.