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Richard Russell: My key indicator is seen below.  Here we see the Dow holding persistently and bullishly above its 200-day moving average.  How long will this constructive situation last?  Ah, if we only knew (I think it will be quite a while).

According to this week's Barron's, the majority of leading advisors are bullish on the stock market.  But I don't operate on the basis of what the majority of analysts believe.  I always put the price action in the market first on my list of what to believe.

And below, we have an interesting situation.  The D-J Transportation Average is in a head-and-shoulders pattern which has broken down.

Below, we see that the Dow is not confirming the weakness in the Transports.  With the Dow refusing to break down and refusing to confirm the weakness in the Transports, the market should be ready to rally.

An interesting part of the picture is the P&F chart for the Dow.  The Dow formed a consolidation formation with a low at the 15,350 box.  Next, we saw a little three-box advance, and then a downside reversal which broke below 15,350.  The Dow has now surpassed its downside price target and appears to have halted at the 14,800 box.

This is well above the rising blue trendline.  The decline has been extreme in that it has traveled past its downside target.  My guess is that the next move of the Dow will be to retrace part or all of its most recent decline.  Overall conclusion -- the main trend remains bullish.

The long maturity end of the Treasury market is running into trouble.  This is the part of the bond market that the Fed does not control.  On its most recent decline, the long bond broke below its rising trendline.  Long interest rates are therefore rising, and thus impacting housing.  KWN note:  See the 14-year chart breaking down below.

The bellwether yield on the 10-year Treasury is starting to surge.  Below we see the yield climbing to a new high of 2.90%.  Will this halt the stock market's climb?  It hasn't yet, but it will be murder on the housing industry.

A fatal problem for Democracy -- When the politicians (who want votes) give the voters everything the voters demand, things get out of hand, as you can understand after reading the paragraph below.

The following amazing statistics from The Week magazine:

In America, 7 out of 10 people are on the dole, said Michael Tanner.  That's the percentage of people who receive more in government benefits than they pay in taxes, according to a new Tax Foundation study.  Some of these beneficiaries of Uncle Sam's largesse are the poor; another new study, by the Cato Foundation, found that families collecting various welfare benefits, including food stamps, “temporary” cash assistance, and Medicaid, could bring in the equivalent of $35,000 a year -- more than someone would earn in a $20-an-hour job. 


Russell also added: For the year 2012, sales of lottery tickets in the US were approximately $78 billion.  In May, Gloria MacKenzie, an 84 year old Florida widow, won the Powerball lottery of $590 million.  Amazing.”

And Russell had this to say regarding gold: Gold gave up 22 points to close below 1400.  I believe gold is simply continuing to build a larger base.  The primary trend for the market remains bullish, as does the secondary trend.

Gold on the P&F chart has (recently) climbed to the 1430 box, and is just below the declining trendline.  At 1440 gold would surge above the red trendline and be in the clear with little overhead resistance.

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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 Pierre Lassonde, Dr. Paul Craig Roberts, Art Cashin, James Turk, Eric Sprott, Egon von Greyerz, James Dines, William Kaye, Grant Williams, Hugo Salinas Price and Marc Faber are available now. Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.

Eric King

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