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Russell: “We have been living through the greatest boom in recorded history.  It started after World War II.  And I wonder what will follow?  Could it be the greatest depression in history?  Frankly, that's one thought that worries me.  I believe as our economy and the world economy sink, the Fed, under Janet Yellen, will fight the forces of deleveraging and deflation with all the weapons and ammunition in the Fed's arsenal. 


This action will serve to keep bullish sentiment alive for quite awhile, and it will set off many false starts and deceptive rallies in the major indices and averages.  To put it mildly, this advance from the October, 2009 low will not die quickly and easily.  As the huge top builds, public sentiment will change from extreme optimism to puzzlement and then to pessimism.


One of the characteristics of a bull market top is an almost total lack of bears.  The latest CBOE put-call ratio shows the fewest puts in over 10 years.  My old buddy, the late Joe Granville, described a set of new highs on the NYSE, which he called the peak of a bull market.  So far new highs peaked with 536 on May 15, 2013.


The end of a bull market is usually characterized by deceptiveness and foolers.  As the top is formed, we may see many new highs in one stock average or another.  Thus a series of new highs in the widely watched Dow serves to keep traders bullish and optimistic.  As I’ve said before, the US economy, pressured by the bear trend, will continue lower, regardless of fluctuations in the Averages. 


The big picture, which trumps all other consideration, is that the primary trend of the market and the economy is bearish.  This should affect all your actions and thinking as time passes.  I continue to keep an eye on the US Dollar index.  It’s been holding like grim death above 80.  A slide below 80 would confirm the negative case. 


So far the market has behaved in the way I thought it would.  And I believe we are now completing the top.  It started in the year 2000.  The Federal Reserve is helpless as it confronts the power of the primary bear trend.  The bear trend has been held in abeyance ever since March 2009.  But it is now asserting itself.  The US is now faced with a situation where deleveraging and deflation will be the order of the day. 


What’s coming up may not be pretty but I believe it will give birth to a new and better world.  The Federal Reserve will be seen as an engine of inflation and will gradually lose favor in the eyes of the US public.  Meanwhile, the bear market will expose the lies and manipulations of the government and the Fed.  I continue to cite the Transports as leading the way to the downside of this bear market.  The business and economic statistics will deteriorate as the bear market moves along.”


Russell added: “It’s not easy to get a clear picture of today’s economy.  I note many stores that used to be crowded are now close to empty.  The division between the wealthy 1% and the rest of the population is growing ever wider.  John Williams, with his excellent Shadow Statistics, uses traditional methods of calculating unemployment.  His calculations show the current US unemployment is close to 23%, which is near to the 25% of the Great Depression.”


King World News note:  The reason the unemployment is comparable to the Great Depression is because the US is in a depression.  This fact is masked on a daily basis by lies from the government and the mainstream media.  As the economy rolls over and the depression accelerates to the downside, all bets will be off as to what various governments around the world will do in order to stay in power.  The bottom line is time is running out for people to prepare, so whatever you do, don’t hesitate any longer in terms of preparation.


To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.


© 2014 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.


IMPORTANT - KWN will be releasing interviews all day today.


The audio interviews with John Mauldin, Eric Sprott, Bill Fleckenstein, Egon von Greyerz, Dr. Paul Craig Roberts, MEP Nigel Farage, James Dines, Gerald Celente, Andrew Maguire, David Stockman, Art Cashin and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.


Eric King

KingWorldNews.com

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