09/10 Stock advance breaking up

Posted by Richard Russell - Dow Theory Letters

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Richard Russell has made his subscribers fortunes. One of the best values anywhere in the financial world at only a $300 subscription to get his DAILY report for a year. HERE to subscribe. Amongst his achievements Richard was in cash before the 2008/2009 Crash and he has been Bullish Gold since below $300

Ed Note: Richard Russell is bullish Silver and holds one of the largest single positions he has held since the 1950’s in the precious metals.

The following study points to a phenomenon that nobody seems to have noticed. I’ve posted below the Dow yearly low closes during the last ten years.

2000 — 9796.03
2001 — 8235.81
2002 — 7286.27
2003 — 7424.06
2004 — 9749.99
2005 — 10012.36
2006 — 10667.39
2007 — 12050.41
2008 — 7550.29
2009 — 6747.05

Note that at the 2009 (March 9) low the Dow had violated all previous lows going back to the year 2000 — this was a violation of nine previous yearly lows. Did anyone realize the bearishness of the 2009 violation? If ever there was a bearish signal that was it. The 2009 break might have been followed by a stock market crash. But at the March 9 low, the stock market was severely oversold. On top of that, the Fed had opened the liquidity spigots and Fed funds were lowered to zero. That combination was enough to halt the bear market decline and send the stock market into a bear market upward correction.

My belief is that the 2009-2010 upward correction is now in the slow and tedious process of breaking up. For that reason, I have suggested my subscribers to be out of stocks and on the sidelines. Because the primary bear market has been halted or bottled up since March 2009, I suspect that the coming bear leg will be particularly vicious. It will be brutal because the Fed has already “shot its load,” and further activity from the Bernanke Fed will be limited and fiercely opposed by many.


The 85 yr. old writes a market comment daily since the internet age began. In recent years, he began strongly advocated buying gold coins in the late 1990’s below $300. His position before the recent crash was cash and gold. There is little in markets he has not seen. Mr. Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron’s during the late-’50s through the ’90s. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-’66 bull market. And almost to the day he called the bottom of the great 1972-’74 bear market, and the beginning of the great bull market which started in December 1974.