Recently by Richard Russell: Eurozone Chaos
Oh, where have you been, my blue-eyed son? And where have you been my darling young one? I’ve stumbled on the side of twelve misty mountains I’ve walked and I’ve crawled on six crooked highways I’ve stepped in the middle of seven sad forests I’ve been out in front of a dozen dead oceans I’ve been ten thousand miles in the mouth of a graveyard And it’s a hard, it’s a hard, it’s a hard, and it’s a hard It’s a hard rain’s a-gonna fall. (courtesy of Bob Dylan)
The New America – “We are heading into what may be the dirtiest presidential campaign in history. The Obama campaign is planning to use the one billion it hopes to raise to portray the Republican nominee as a dangerous, heartless radical. That nominee is sure to respond with a withering counter-assault.” from The Week magazine.
“Just to replace all the jobs lost in the recession and keep up with the population growth, the economy would have to add 275,000 jobs a month for the next five years.” NY Times.
“The Postal service announced this week that it would dramatically scale back services in a bid to save itself from bankruptcy. The USPS wants to shut over half of its 247 mail processing centers and eliminate 28,000 jobs.” William Falk in The Week.
With the stock market acting poorly, commentators are constantly searching for good news or encouraging statistics in a bid to stir up bullishness. They are wasting their time. The markets do not move on current news.
The real story is in the action of the stock market itself. I refer to the Lowry’s statistics. They show that the urge to buy stocks (demand) is weak and sluggish. Conversely, the urge to sell stocks (supply) is strong and surpasses the desire (demand) to buy. These are not guesses. The Lowry’s figures are derived from the actual daily transactions, based on daily volume and total points gained or lost each day, on the NYSE.
Selling Pressure Index crossed above the Buying Power Index in early September. This was a very significant event showing that we were seeing an important technical CHANGE. Following the cross-over, the peak of weakness occurs when the distance between the higher Selling Pressure Index and the lower Buying Power Index is at its widest spread. On December 7 the negative spread between the two indices hit its widest spread of weakness at 168 points.
The spread allows us to measure the extent of the growing weakness in the bear market. On Dec. 7 the negative spread was 168. By Dec. 16 the spread had widened to 207.
I talked with my good friend, Joe Granville, over the weekend, and Joe is as bearish as I’ve ever seen or heard him, based on his OBV volume figures. This checks with my own work and studies.
While fundamentalists scour the news for indications of bullish news, the internals of the stock market continue to deteriorate. Even the action of the stock market is bearish as the market rallies on dull volume but declines on higher volume. Furthermore, rising breadth is narrow on rallies while declining breadth is broad when the market heads down.
I don’t know what more I can do or say to convince subscribers that we are seeing the resumption of the bear market. This means that we should be OUT of all stocks. As for gold mining stocks, this is a personal choice. In due time, I expect gold to fully express itself with a huge upside blow-off. At that time I expect gold mining stocks to follow, but between now and then gold mining shares will probably be hit like every thing else by the fury of the bear market.
I should add that I am expecting this bear market to be far worse than most people expect or are prepared for. The fact is that I don’t believe that Americans expect any thing more than a temporary spate of difficult times, an annoying patch that should be over in a year or so. This is not what I am expecting or predicting.
Once the Dow breaks under 10,000, I believe that the analysts and the PUBLIC will become frightened and start to cut back on their buying. The newspapers will halt their bullish stance, and a great stillness will envelope that land. That stillness will be the result of shock as it dawns on Americans that they are seeing something far different than what they were expecting.