On the heels of the Dow plunging 360 points, the Godfather of newsletter writers, 91-year-old Richard Russell, just warned that we have entered a bear market in stocks, plus Fred Hickey expects a huge rally in gold!
August 20 (King World News) – The Stock Market Has Turned Bearish
Richard Russell: “As subscribers know, I wish the best for America and believe that America is the hope of the world. Yet there are a few things that worry me.
I believe the US economy is sinking into recession as described by John Williams of Shadow Statistics. I believe we are in a period of deflation and deleveraging. I am convinced that the Fed knows the economy is contracting and this is the reason that they have not yet raised rates.
Professionals Selling Stocks To An Unsuspecting Public!
There are now 10 distribution days* in the S&P and 4 in the Nasdaq. Thus it is clear that many institutions are stepping to the sidelines. A combination of ten distribution days in the S&P and 4 in the Nasdaq comes to an ominous total of 14, and it puts the market under pressure.
As I write at the close, the Dow is down 357 and has broken below the critical 17,000 level. Transports are down 207 and have closed only 92 points above the 8,000 level. The Nasdaq has cracked the 5,000 level, down 141 to 4,877. To top everything else, my PTI is below its 89-day moving average.
Mighty Apple (AAPL) the world’s highest capitalization stock, closed down 2.36 to 112.65. The US dollar index closed down 0.42 to 95.94. Dollar holders are getting the message that the US economy is in trouble. At the stock market close, gold was up 18.6 to 1152.7 and silver was up 24 cents to 15.55. It is increasingly probable that the lows in the precious metals have been seen.
Russell Warns We Have Entered A Bear Market In Stocks
I believe the stock market has gone bearish; subscribers should stay with their position in physical silver and gold. Gold is a friend of free markets and the enemy of central banks and their fiat money. Rejuvenating a sick economy by creating more currency has never worked, and it won’t work this time.
Fred Hickey Says Gold Will Soon Have A Huge Rally!
Russell continues: “Fred Hickey is one of the smartest analysts and one of the hardest workers I know. The following is an excerpt from Hickey:
“There’s so much spin that comes out of Wall Street every day from hucksters who want this long-in-the-tooth stock bull market to continue (forever). The financial media (example: CNBC) is no better, with most of them doing Wall Street’s bidding (it’s who pays them) and cheerleading the Fed’s interventions because they’re died-in-the-wool believers in central planning and big government.
If I’m correct and the central bankers are failing and likely to lose control, then we should see major turns in fortunes for both stocks (a continuation of the current sell-off) and gold (a huge rally) soon. The paper gold speculators currently have off-the-charts record short positions based on faulty assumptions: that money printing works, that the economy is finally improving and that the Fed will be able to extricate itself from its 0% rates and bloated balance sheet box without blowing up the economy (and world). History is on our side. Money printing never works. The paper gold shorts will be vanquished.”
I read a lot, but I can’t cover everything. I try to be a cheerleader of the US, then I get a letter like this:
Dear Russell,
I’d like to draw your attention to the fact that, since June 5th, the 5-day moving average of new lows has exceeded the 5-day new highs 42 out of 51 trading days. Furthermore, the 5-day lows have been CONTINUOUSLY greater than the 5-day highs for the past 21 consecutive trading days (i.e., since July 20th).
I don’t remember seeing such a severe situation in the Hi-Lo, not even in the severe bear moves of 1970 and 1974. I am reminded of the comparison of an army, led forward by bullish officers under heavy fire. The line of officers bravely continues forward, scarcely noticing that more and more of the foot soldiers have fallen. With the bottom falling out from under more and more stocks, how much longer can the bullish officers continue?“
* King World note: When Russell warns about “distribution days,” he is cautioning that the professionals are dumping overvalued stocks to an unsuspecting public.
I would urge all KWN readers around the world to subscribe to Richard Russell’s 90 years of wisdom and remarkable writings at Dow Theory Letters by CLICKING HERE TO SUBSCRIBE.
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