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Richard Russell continues:

“Even more important, Buying Power since last February has been in a sideways movement -- but in late-July Buying Power suddenly broke down and embarked on a long down-sloping trend. At the same time, Selling Pressure was gliding down gently but it suddenly turned up in late July. What we see now is the two indices spreading apart which is extremely bearish -- Selling pressure is steadily increasing while Buying Power is dropping like a stone.

This clear and steady deterioration in the market's internals is being masked or hidden by a parade of good news regarding the US economy and by a persistent and deceptive rise in the Dow. At some point in the near future, the weakening internals of the market will cause the Dow to buckle and the bear market will burst into view again.

The aftermath of debt bubbles, when they burst, is measured, not in years, but in decades. I've said before that my signal for the end of this extended top will be that time when the Dow breaks below 10,000. Once, having violated 10,000, I expect consumers to turn dead-bearish, and I expect the currently optimistic analysts to become pessimistic.

Once again I beseech (beg) my subscribers to be OUT of stocks. The outlook for the markets, all of it, is now very bearish. We are watching the greatest debt bubble in history about to deflate, and it won't be a pretty sight.

All man-made money is a liability of the creator and I am afraid that. Man-made money is ultimately doomed. Gold will be the last man standing as it has been over thousands of years.

At the start this site I mentioned that already 6.3 trillion dollars have been lost in this early, and I emphasize, early, stage of the bear market. The essence of what I foresee ahead -- we are now moving into the second half of one of the greatest bear markets in history. It will not be a time for making money, rather it will be a time for austerity and survival.

Europe is already practicing austerity, and shortly I expect the US to follow in its footsteps. One great problem is that the US's politicians are trying to avoid pain. Austerity means pain, and to reduce our consumption and spending means one thing – taking the pain.

Already the early signs of pain are appearing, and of course what I'm talking about is unemployment well above the present level. During the 1930s unemployment rose to 25%. I think ultimately we will again see unemployment above 25% before this bear market ends.

Signs of inflation are now appearing. Super Bowl ads for this year have already sold out at the price of 4 million per 30 seconds a piece. Starbucks has just raised its prices. The prices of oil, silver and gold have surged higher today -- all signs of inflation. Almost all commodities closed higher as well.

Amid all the good news, investors took the the bit in their teeth today and pushed the Dow substantially higher. Tomorrow I'll see how the internals of the market were affected by today's Dow action.

My bet -- Obama will be will be a one-term president after the next election. The economy, the stock and bond markets -- and stubborn unemployment will defeat him.

Again, my very best for the new year to all my faithful subscribers.”

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Eric King

KingWorldNews.com

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Richard Russell - Why Unemployment Will Rise Above 25%

With gold, silver, stocks and crude oil all posting strong gains, and continued worries about where the global economy is headed, the Godfather of newsletter writers, Richard Russell, had this to say in his latest commentary: “Lowry's is one of the technical studies that I depend on in my appraisals of the stock market. Turning then to Lowry's figures, what we see here is critically important. In early August, the Buying Power Index (demand) broke below the Selling Pressure Index (supply).”

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January 4, 2012

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