below from january 29th edition of richard russell, and i quote,
"I believe we're heading into something that nobody, in their wildest dreams, is thinking about. What will it be? It will be a full correction of the entire rise from the 2002 low of 7286 to the bull market high of 14164.53 set on October 9, 2007. Remember, I warned about the 50% Principle which came into play at the halfway level of the Dow 2002 to 2007 advance? That halfway level was 10725. After topping out in late 2007, the Dow turned down and violated the 10725 level. After bearishly breaking the 50% level, the Dow continued its decline and sank to 6547.05 on March 9, 2009.
Since that March low we've experienced a bear market rally. The rally that advanced the Dow to 10725.43 on January 10, 2010.
Thus, and it's really incredible, the Dow rallied exactly back to the 50% Principle level. Having risen to 10725.43 on January 10, the Dow then turned down. I consider this extremely bearish action. It's as if the market see-saw swung all the way back to the old 50% level and then turned down.
Picture a child's see-saw. The heavy end rises to exactly its horizontal level, but it stops there. From the horizontal position, the heavy end of the see-saw sinks down again to the ground. The market can act, physically, like a see-saw.
Working again with the 50% Principle, I now see the market sinking down, much like the heavy side of a child's see-saw. I see the Dow declining to the low from which the entire rise started. That low was the 2002 low of 7286. If the Dow does not halt its decline at 7286, I see it sinking down to its 1980-82 area, which would be around Dow 1000."
ouch ... ouch ... and ouch again |
