Richard Russell's Contributions

We're going to see a rebirth of the housing industry. Already, there is news of a pick-up in home prices in Phoenix and Las Vegas and South Florida. It was the drastic collapse in real estate that triggered the Great Recession.

Where are we? Here's my thinking: My position is that we will remain in a long term or primary bear market as long as one or both of the Averages -- Industrials or Transports -- are below their September highs.

I have a dilemma. If the Dow continues to climb, and if it climbs above its record high of 14,165 and continues to climb from there, then the economic coast will probably be clear for a while, and I'll be pleased that any disaster will be put off for a while.

The US national debt is now over $16 trillion — and growing at the rate of more than $1.2 trillion a year. This is clearly unsustainable. But how to cut the debt? One way is to cut entitlements, which are growing exponentially. Will they cut Medicare? Cut food stamps? Cut any entitlements at all? No politician would dare make extensive cuts in entitlements.

I'm convinced that Bernanke wants to bull the Dow higher to ensure that it's up two months prior to the election (this on the basis that if the Dow is up during the two months prior to the election, the incumbent almost always wins).

The Founding Fathers warned against fiat money, money that was backed by nothing, money that nobody worked for. If the Founding Fathers could see what has happened to their republic, they would roll over in their graves.

Two days ago, amid all the low volume and sluggishness, the Transports gave us just a hint of something hopeful. It was a breakout of the declining trendline, as you can see on the chart.

It's amazing the way this stock market is working. The pro traders buy the Dow -- just in case the Fed triggers QE3. No pro can afford to miss a big rally. Then near the close, when QE3 is NOT triggered, the frustrated traders dump their stocks, and prepare to do the same thing the next day.

It occurs to me that Bernanke and Draghi have been talking to each other, and between the two they have kept the optimists hoping and the shorts scared stiff. In the meantime, the markets have been playing "footsies" with the D-J Averages.

Housing has been one of the bearish sectors of the economy and the stock market. If housing has really turned bullish, it should be confirmed by the Dow Theory and the Averages. So let's see if the Industrials and Transports can both close above those May peaks, which to refresh your memories were 13,279.32 and 5285.97.

The big picture can be understood if you fully understand the yield cycle. Throughout stock market history, the yield on the Dow has run from tiny yields to high yields, and back to minuscule yields again, and then back to high yields.

The anniversary of D-day (when the Allies invaded France) has passed, so I thought I'd write something personal about WWII.

Last week the Congressional Budget Office stated that the US faces a "fiscal crisis." The nation's publicly held debt will climb to more than 70% of GDP by September 30 -- the highest rate since WWII -- and up from 40% in 2008.

The Dow Jones industrial Average recorded a high of 13,279.32 on May 1, 2012. This Dow high was not confirmed by the Transports. The two averages then turned down and broke below their April lows. This action confirmed that a primary bear market is in progress — it was a textbook bear signal.

A nation like China is losing billions in purchasing power by collecting and holding dollars. It's more than the leaders of China are willing to suffer through.

Study the two complex corrections, the first at April-July 2010 and the second at July-October 2011. Both of these were weird enough and complex enough to scare most people out of the market, but both corrections were followed by solid gains. Could we have a third such correction now? My PTI does not suggest another correction here.

"Fools and fanatics are always so certain of themselves, but wiser people are so full of doubts." -- Bertrand Russell. Every once in a while I like to take a very broad view of all the markets -- the US and the rest of the world. So here it goes.

What's the best performing stock of the last few years? Would you believe it -- it's a leading seller of bolts, screws and nuts. (Their products are known as threaded fasteners in the trade.) The name of the hot company is Fastenal.

You think this presidential race is nasty? The Founding Fathers had it beat. In the race between John Adams and Thomas Jefferson for president in 1800, Jefferson called Adams "a blind, bald, crippled, toothless man who is a hideous hermaphroditic character with neither the force and fitness of a man, nor the gentleness and sensibility of a woman."

The great GOP debate continues with Gingrich finally dropping behind the Mitt. Meanwhile, the stock market is caught in the puzzle of will Europe emerge whole from its current troubles, or will the Eurozone fall apart like a deflating balloon?