Richard Russell's Blog

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Russell began publishing Dow Theory Letters in 1958, and he has been writing the Letters ever since (never once having skipped a Letter). Dow Theory Letters is the oldest service continuously written by one person in the business.

Russell gained wide recognition via a series of over 30 Dow Theory and technical articles that he wrote for Barron's during the late-'50s through the '90s. Through Barron's and via word of mouth, he gained a wide following. Russell was the first (in 1960) to recommend gold stocks. He called the top of the 1949-'66 bull market. And almost to the day he called the bottom of the great 1972-'74 bear market, and the beginning of the great bull market which started in December 1974.

The Letters, published every three weeks, cover the US stock market, foreign markets, bonds, precious metals, commodities, economics--plus Russell's widely-followed comments and observations and stock market philosophy.

In 1989 Russell took over Julian Snyder's well-known advisory service, "International Moneyline", a service which Mr. Synder ran from Switzerland. Then, in 1998 Russell took over the Zweig Forecast from famed market analyst, Martin Zweig. Russell has written articles and been quoted in such publications as Bloomberg magazine, Barron's, Time, Newsweek, Money Magazine, the Wall Street Journal, the New York Times, Reuters, and others. Subscribers to Dow Theory Letters number over 12,000, hailing from all 50 states and dozens of overseas counties.

A native New Yorker (born in 1924) Russell has lived through depressions and booms, through good times and bad, through war and peace. He was educated at Rutgers and received his BA at NYU. Russell flew as a combat bombardier on B-25 Mitchell Bombers with the 12th Air Force during World War II.

Market Improving; Gold Weakens Relative to Stocks

The character of the market is improving. Volume on Friday's buying was the strongest of the year with upside volume being 85% of total upside plus downside volume. The negative spread between Lowry's downside and upside volume contracted from 190 last Friday to 169 yesterday, a huge improvement.

Gold Is Absolute Money!

There is only one safe asset on the planet: that safe asset is gold. Uninformed people believe gold is just a commodity. Wrong, gold is absolute money. Gold alone is the world's only completely safe currency. Gold has no counter-party against it, and no central bank has ever found a way to create gold.

Market in Dangerous Territory

At the close of the market last week, Lowry's Buying Power Index stood at 262 and their Selling Pressure Index stood at 434. This means that Selling Pressure (supply) was 172 points above Buying Power (demand).

The Pressing Weight of Compounding Debt

Just as compounding turned rising money supply into fortunes, compounding the rising interest rates will turn fortunes into shoestrings.

Do Not Sell Your Gold

Day after day, everyone asks whether gold has topped out. Nobody ever asks whether the market has topped out. Think about it, we're in a low inflation, low investor fear environment, a dollar that appears to have bottomed and is now firming, and still gold holds above 1700 an ounce.

A Few Observations

What ever happened to Obama's promise to reduce our tax returns to a post card that could be filled out in ten minutes? Like so many Obama promises, the post-card promise ended up with zip.

When Debt Was a Dirty Word

As I see it, the fundamental problem that the US and the developed nations are dealing with is the contraction of decades of over-spending and borrowing and debt-building that has occurred in the decades since the end of World War II.

Market Barometer Turns Bearish

Last week Lowry's Selling Pressure Index crossed ABOVE its Buying Power Index, a move that I consider bearish. Thus, the barometric needle has switched over to the bear side. In the past there have been manic periods like the one we have been going through. This switch in Selling Power to the dominant position, is an early warning sign.

Temporary Reversal or Beginning of a Bear Market?

For the answer to this critical question, I turn to other studies. One is the "Fanline Principle" that I illustrated on the August 5 site. Based on the fanlines, I believe this is a serious reversal to the downside.

The Most Important Chart Right Now

The daily chart below of the Wilshire 5000 has carved out a discernible potential head-and-shoulders top. The horizontal blue line shows where the support is. I suggest that this is the most important chart we are now dealing with. If the right shoulder can avoid breaking support it will have bullish implications. But if the pattern is completed and the right shoulder of this head-and-shoulders pattern breaks down, then the market will have delivered its sternest warning.

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