usa would be the more practical market to short
because china is doing just fine, per my read
per r russell read
May 24, 2010 -- "Once the top has been put in, the stock market has nowhere to go but DOWN." Richard Russell
And the top has definitely been put in. What do I do next? My job is to get my subscribers OUT of stocks in any way I can. I've used logic, technical analysis with explanations, threats, pleading, history, tears, arguments from authority (my authority), warnings about the treacherousness of the bear. What's left? I guess more work on my part.
I showed subscribers the rare head-and-shoulders top-pattern in my PTI.
I showed you the bearish pattern in the point&figure chart of the Dow.
I showed you the bearish simultaneous breaking of the May 7 lows by Industrials and Transports.
I included a chart of the fatal downward zig-zag in the advance-decline line.
I show on today's side where 50% of the stocks on the NYSE are now trading BELOW their 200-day moving averages.
Here's another critical factor. The March 2009 bottom occurred almost 14 months ago. The market has generally advanced since then. But at present, Lowry's Selling Pressure is substantially ABOVE their Buying Power Index. This is an anomaly. It shows that persistent selling has occurred all during the 14-month rise. But Lowry's explains it as a result of the fierce selling which took place during 2007-09. In fact, Lowry's writes that "These figures suggest the loss suffered by the market during the recent bear market was on par with arguably the worst bear market ever suffered in the US."
I disagree basically (and possibly for the first time) with Lowry's. I believe we've been in a 14-month upward correction in an ongoing primary bear market. Therefore, the continued selling during the upward correction was normal. It was selling by the smart money under the cover of a rising Dow and optimistic forecasts. The selling was so persistent that even at the peak of the advance, Selling Pressure still dominated the Buying Power Index.
The fact that Lowry's Selling Pressure Index is so far above their Buying Power Index makes me believe that any forthcoming downside action by the stock market could be extremely severe
One more argument. My friend, Joe Granville, runs his own unique method of analyzing his on-balance volume figures. Joe has been extremely accurate on the markets. Joe's OBV figures have turned decisively bearish. I add Joe's work to my all-around compilation of bearish arguments and warnings..
In the meantime, the analysts, the economists, the politicians and the so-called "experts" hypnotize each other with fantasies, hopes and guesses regarding "the coming good times." As far as the stock market is concerned, the politicians and economists don't have a clue as to what is happening and what it means. And if they do have a suspicion, they remain in denial -- all the while spouting their latest rosy economic forecasts.
The fact is that people believe what they want to believe. And if the stock market doesn't project what people want to believe, they turn against the market while calling it "out of its mind," or they claim that analysts are misreading the market's "wrong" actions.
William Hamilton, the great Dow Theorist and early editor of the Wall Street Journal, wrote, "When coming events cast their shadows before, those shadows fall on the New York Stock Exchange."
Well, believe me, the shadows have been falling on the New York Stock Exchange, and the shadows are saying (I've warned about this dozens of times) that there's "a hard rain's a'comin." And Richard Russell's main concern is to open up the umbrella and attempt to keep his subscribers out of that hard rain.
You may remember that I compared the bear with a cat playing with a dying mouse. The mouse will crawl away and just when it looks as though the mouse has escaped, the cat will pounce on the mouse again. That's the way I see today's bear acting. He's playing with the minds of the bulls. Study the chart below. This is the percentage of NYSE stocks trading above their 200-day moving averages. The percentage plunged and has recovered minimally to 51.2%, meaning that only half the stocks on the NYSE are holding above their 200-day MAs. RSI, which is a momentum index, and MACD are both in the oversold zone.
This suggests that we could have a few days of rally, which might bring the index shown on the chart back to maybe 70%. But as far as I'm concerned, the fate of this market is written in stone. The top is in. My work says that we've seen the top, and we've seen the highs for the entire bear market correction.
And I'll repeat what I said at the beginning of this site -- if we've seen top and the highs, this market has nowhere to go but down. And down it will go. The only question in my mind is the form or pattern this bear market will take as it makes its way down to its inevitable bottom. At the bottom, assuming that the US is still in "functioning" condition, we'll see blue-chip stocks selling at incredibly low prices. The problem -- will we have the cash and the guts and the understanding to buy the bargain blue-chips?
Remember, now is your final and best place to raise cash. And if cash (Fed notes) are worthless by the time this bear market reaches its low, then we have gold. You can't devalue gold. You can't eliminate its value. Since pre-Biblical times, gold has been the one standard of value. "Why is that?" you ask. And the answer is that gold is imbedded in the DNA of man. Nothing else has ever been discovered or developed to take gold's place. Nor has any argument or rationale diminished man's eternal lust and desire for gold.
Gold -- The phoney warnings are out. "Gold is still a chancy investment, it pays no dividends and its in a bubble." I talked to one of the managers of a multi-billion dollar fund last week. His funds owns no gold. And he couldn't understand the "meaning" of gold. I tried to explain to him the concept of gold. It was like trying to explain to him youth's love of rebellion. To understand gold, you have to be part philosopher.
At any rate, mankind seems to intuitively love gold. Mankind intuitively treats gold as wealth. The acceptance of gold has existed in every religion, and in every nation of the world since the dawn of man. Why argue? If you can't understand the importance of gold, it's your problem. Do the work, read about it. It's like not understanding gravity, it's there whether you understand it or not.
As I write a few hours after the opening, June gold is up 16.70 to 1192.90. June gold is back above 1100 again, and minus a lot of amateur traders.
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