Third Time No Charm for Bulls

Saut refers to several bullish news articles that "come around upside inflection points" such as recent Wall Street Journal pieces titled "Rising Stocks Kindle Worries of a Melt-Up," and "Dow Theory Seems in Play For Some Bulls."

In addition, he says the market feels "heavy," noting that "many of the market's darlings like MasterCard (MA Quote) got 'spanked' last week," and "that valuations are not particularly cheap." MasterCard slid 9.7% on Friday and another 1.5% Monday.

Sentiment may indeed be getting frothy. Merrill Lynch's U.S. sector analyst Brian Belski provided investors with a snapshot of European investor sentiment from his multicity tour last week. On market performance, the investors said the "likelihood of a price correction in U.S. market indices is severely discounted due to low volatility and increased liquidity; talk of a correction is increasingly diminished given consensus call for a correction in [the fourth quarter] that 'never happened,' " writes Belski.

The investors see liquidity as "the great equalizer," he writes. Any correction or pullback "will be easily sponged up by aggressive investors (hedge funds), with private equity trends providing a level of buying support overall," Belski continues.

These European investors are still pouring into energy and materials sectors, noting both that "global demand is too strong to ignore," and that "market leading performance the past fourth months is a call for continued global growth."