So far, the decline in the market has been fairly orderly; no panic, no hysteria to get out – even the VIX has remained calm [but] I wonder how much longer the decline will continue to be orderly. Frankly, there’s something eerie about what’s happening and, to be honest, what’s happening is almost beyond analysis. I have nothing to compare it with….I really have to go on my intuition and instinct at this point – and my instinct is to get in cash.
So says Richard Russell (https://ww2.dowtheoryletters.com/) in edited excerpts from an article posted exclusively on King World News which can be read in its entirety here.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity. This paragraph must be included in any article re-posting to avoid copyright infringement.
Russell goes on to say, in part:
There are so many potentially bearish scenarios in the wind that my head is spinning.
- As of today’s closing, Dow down 14 out of 16 sessions! This is one you can tell your kids about – and still no collapse in breadth, and still no crash.
- Last night, I noted that the Dow futures were down 55 points. I can’t remember ever seeing a series like this in my lifetime.
- The negative spread between Lowry’s Selling Pressure Index (supply) and their Buying Power Index (demand) has widened to 184, the widest on this series. The wider the negative spread, the more bearish the picture.
- The two Dow Averages have plunged below their April lows, delivering a bona fide Dow Theory bear signal.
So yes, this is a continuation of the bear market – but it’s starting out in a stranger way than any bear market I’ve ever seen. I have nothing to compare it with….I really have to go on my intuition and instinct at this point – and my instinct is to get in cash.
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Marc Faber has stated in an interview* on Bloomberg Television that “I think the market will have difficulties to move up strongly unless we have a massive QE3 (something Faber thinks would “definitely occur” if the S&P 500 dropped another 100 to 150 points. If it bounces back to 1,400, he said, the Fed will probably wait to see how the economy develops)….. If the market makes a new high, it will be with very few stocks pushing up and the majority of stocks having already rolled over….If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987.” Words: 708
Investors are being told that the worsening sovereign debt crisis in Europe will leave the U.S. economy unscathed….[because,] since we don’t make many things to export to Europe, our GDP won’t suffer a significant decline at all…. What [has been] conveniently overlooked, [however’] is the fact that 40% of S&P 500 earnings are derived from foreign economies and the seventeen countries that make up the Eurozone have collapsed into recession. [Let me explain what effect that will have on the performance of the S&P 500 this summer.] Words: 325
Charles Nenner has been accurately predicting movements in the liquid markets for more than 25 years, and his most recent cycle analysis predicts that the current stock market rally is going to last through Q2 and then begin a major descent in 2013 – with the Dow eventually reaching 5,000! Read on to learn how Nenner’s unique system works and what he forecasts for commodities, currencies, bonds, interest rates and more. Words: 400
With the S&P 500 at its highest level since the summer of 2008, investors previously sidelined by reoccurring fears of a double dip recession and nagging worries about a disorderly Greek default may now be tempted to hold their noses and dive into the market where, presumably, they will be swept along to the land of outsized profits by the Dow 13,000 wave. Having said this, it is worth noting that often the best time to sell is when everyone else is buying. Now may be that time. [Let me explain.] Words: 885
At the end of November 2011 the U.S. behavioral indicator for the U.S. stock market, based on insights on investor psychology, touched the crisis threshold for the fifth time (1971,1979, 1986, 2006) since 1970. If the current case follows the four prior cases, we expect a similar positive return from November 2011 to the end of October 2012 as in the four prior periods followed by a decline somewhere between 15% and 30%. [Let me explain.] Words: 317