A brief excerpt of the lengthy daily internet 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. HERE to subscribe.
Saturday Oct. 17th
Since 2002, the Dollar Index has been down 38%. That means that you’re losing purchasing power by holding your Treasury bonds. What good is 4% a year (or 16% over seven years) if you’ve lost 38% of your purchasing power during the same time period? So as the dollar heads down, you sell your bonds. Which is what is happening now in many quarters.
The chart below traces the tragic path of the US dollar since 2008 (courtesy of the Chart Store).
Friday Oct. 16th
“Two things are infinite — space and human stupidity.” – Albert Einstein
I’m one of those weird birds who watches the count of consecutive months of advances or declines. I do it for overbought or oversold purposes. For instance, on the bear leg down from the Dow 2007 high to the Dow 2009 low, the count was down an incredible 14 out of 16 months. That series rendered the Dow severely oversold. Then we got the V bottom, as seen on the monthly chart below. In all the years I’ve been studying markets, I’ve never seen a bear market end in a V bottom. Compression on the downside leads to compression on the upside. Following the March 2009 low, the Dow advanced seven out of eight months to October, which is where we are now.
Below, a monthly chart of the Dow, which illustrates what I’ve written above.
Gold bull market. Gold has closed higher for nine consecutive years. And yet, the great majority of investors continue either to ignore or be sceptical of gold. (Ed Note – Richard has been buying gold since it was below $300 in the late 1990’s and still continues to buy Gold and Gold related items such as Gold Share ETF’s)
Despite a host of concerns (weak economy, high unemployment, mounting foreclosures, geopolitical issues, etc.), the Dow made another post-crash high today. While the recent string of new rally highs is significant (especially coming on the heels of a major stock market plunge), it should be noted that the Dow is currently testing resistance (see red line).
The 84 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. He loaded up on bonds in the early 80’s when US Treasuries where yielding 18%.