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Richard Russell:  “When things get this crazy, one has to go by the seat of one's pants.  According to Gene Epstein in this week's Barron's, the US jobless rate is not 7.6%, it's actually 7.9%.  Since the 2009 lows, the nation's Gross National Product has swelled by $1.3 trillion, but the stock market has gained $12 trillion in value.


Meanwhile, the VIX has dropped to a multi-month low under 12, meaning that option traders see low volatility in coming months.  And I'm thinking, after the calm comes the storm.  For all the above reasons plus a churning in my stomach, I'm exiting this market (good-bye DIAs), and I suggest that maybe my subscribers might do the same.  But it's up to the individual.  You might stick around with a mental stop loss on your DIAs if they break below 154.


The drivers of this market are the money managers who are playing the upside for all it's worth.  After all, where else are they going to go?  Some bears are predicting that the economy is not through deflating and deleveraging, and therefore the Treasuries should head higher.


There are just too many “ifs” in the stew for me, so I am happy to retire to the sidelines.  Sure, with the Industrials and Transports at new record highs, technical analysis and the Dow Theory say that this market “should” go higher.  But for me, it's a case of the weird getting weirder, and it's all a little too much for my tired nerves.  The Dow Theory does emphasize VALUES, and the D-J Industrials now sell at 16.83 times earnings while dividends are a micro 2.35%.


… The markets are now trading on manipulated information (CPI and GDP) about the economy, and manipulated stimulus from the Federal Reserve.  I will say that in the 60 years I've been studying markets, I've never, ever seen anything like the situation the markets and the economy now find themselves in.  I have only one comment and prediction -- It will not end in a good way. 


In the meantime, gold has formed a sort of misshapen head-and-shoulders bottom pattern, as you can see in the chart below.




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© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


The audio interviews with James Turk, Hugo Salinas Price, Chris Powell, Bill Fleckenstein, Eric Sprott, Egon von Greyerz, David Stockman, Andrew Maguire, John Mauldin, Art Cashin, William Kaye and Marc Faber are available now. Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.


Eric King

KingWorldNews.com

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