One Picture Is Worth a Thousand Tears

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Recently by Richard Russell: Green Shoots

     

It’s no pleasant sight to see our beloved stock market crashing, but that’s the sight that’s greeting me this morning near the opening. The Dow is down almost 300 points, while its companion Average, the Transports are down 155 points. It’s as if hell’s fury has fallen on the NYSE.

Why is it happening? What’s wrong? Answer – Everything is wrong. The nation is suffering from 65 years of debt-building and over-leveraging, and instead of moving to right the wrongs, the US is slapping undersized bandages on spreading cancerous wounds. The fact is that if a private corporation was following the same path, it would have already have been forced to declare bankruptcy.

The US is "too big" to have its rating lowered by the rating agencies. The implications are too serious. Instead, the stock market is doing the job. After all, a crash is comparable to a rating lowered from AAA to AA or lower.

In this business, one picture is worth a thousand tears. Below we see the Dow plunging below both its 50-day and 200-day moving average and far below its near-by June lows. The Dow has fallen 8 out of the last 10 sessions. Oversold? Yes, indeed, but nobody’s told the market yet.

Below we see the Transportation Average, falling lock and step with the Dow. Like the Dow, the Transports are oversold, yes they are.

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