That's what Peter Brimelow wonders in his latest MarketWatch column on newsletters. One section:
Richard Russell summarizes the situation in his Dow Theory Letters:
"Does not look good. But you don't have to take my word for it, look at the daily chart...The Dow has been down four out of the last five sessions and is now trading well below its 50-day moving average...Note the increase in volume on today's negative action, another 'Distribution day.'"
Russell went on:
"I've done my best to warn subscribers of 'the coming weakness.' True, I had to use instinct and my 'market sense' to do it, but the picture is becoming progressively more ugly. By my early computation, down volume today was an ugly 92% of up + down volume... it tells us that this market has the potential to panic on the downside."
But, Russell cautioned, with characteristic cunning:
"Remember, after a 90% down-day, it is normal to see a 4 to 7 'dead cat bounce' on the upside. It's like a man who's shot getting up for a few seconds in shock -- just before he falls down again."
And this from Charles Allmon:
Allmon has long been a brutal bear, tempered by his extraordinary stock picking. But in his most recent letter, he wrote:
"My guess? 2010-2020 may prove to be even more volatile than its predecessor decade...Bottom line? We might see the Dow visit the 3,000-4,500 range, and 21,000, all in one decade."
Hmm. I presume Allmon means the Dow will visit 3,000-4,500 first. Don't you think?
I don't see anything in Allmon's career methodology (micro fundamentalist, number-crunching earning, assets, leverage) to explain his macro market-timing intuition.
But (OK, I've been around a long time!) I'm eerily reminded of long-forgotten Edson Gould, equally venerable editor of Findings and Forecasts, the great perma-bear of the 1970s, who stunned everyone by predicting out of the blue that the Dow could reach the stratosphere -- "3,000, 4,000, or 5,000" -- in the 1980s.
Food for thought.
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