Updated – Gold and Stocks

Posted by Richard Russell - Dow Theory Letters

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Comment after the close March 6th/09

“Most are convinced that there’s a bottom in the days ahead, and that the next “big rally” will recoup at least part of their losses. I think this is hopes and wishes. I don’t see anything in my work that hints of an important bottom. The losses in this bear market so far, have served to allow many to reason that “it’s been so bad, these loses can’t continue, and that it’s time for a big recovery.”

For those still in the market, he has this advice:

“Nobody knows how bad this bear market will be, certainly I don’t. I believe the old adage, “The first loss is the best loss.” That says it all. I’d move to zero holdings of stocks, and just prepare for a “hard rain.” I’d think in terms of survival and get out of debt, get out of stocks, get out of anything I might worry about. These are strange times, and they call for bold action. Do whatever you have to do to give yourself a good night’s sleep. Do it, do it, do it. Sorry I can’t give you a happier response, but that’s the same advice I’ve given my kids.”

Comment after the close March 5th/09


Gold or GLD — GLD has tried three times (red arrows) to break out above the upper trendline of this “flag” pattern. Lately, it has succeeded. This may mark the end of gold’s correction. Today’s upward surge was a good start.

I can’t remember when we’ve seen a sicker market.  My interpretation — the stock market is saying with certainty that the economy will be worsening. No question about it, the market is giving a big negative reaction to what’s coming out of Washington. So far, their efforts to hold the bear market are failing miserably.

The deficits, banks, housing foreclosures, the consumer pull-back — the Washington reaction, lump them all together and throw money at them. “The US economy is just not that into it.” Neither is Wall Street.

The 84 yr. old writes a market comment daily since the internet age began. 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. Through Barron’s and via word of mouth, he gained a wide following. 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.

Partial comment from the lengthy daily comment by  Richard Russell of Dow theory Letters. One of the best values anywhere in the financial world at only a $300 subscription to get his report daily for a year.