Richard Russell Moves into "Apocalyptical Mode"

From Peter Brimelow's MarketWatch column covering newsletters:

Nevertheless, the veteran Richard Russell is moving into apocalyptical mode in his Dow Theory Letters.

He wrote after the market closed Friday: "I think this bear-market rally is in the process of breaking up. I'm guessing that the Dow is going to run into some panic action early this year, and I think the Dow will violate first its November low and then its March low."

"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 7,286 to the bull market high of 14,164.53 set on Oct. 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 10,725. ... Having risen to 10,725.43 on Jan. 10, the Dow then turned down. I consider this extremely bearish action."

Russell went on: "I see the Dow declining to the low from which the entire rise started. That low was the 2002 low of 7,286. If the Dow does not halt its decline at 7,286, I see it sinking down to its 1980-82 area, which would be around Dow 1,000."

Then Brimelow reports on Russell and gold:

(Incidentally, Russell has some savage words about George Soros, who recently opined that gold may be in a bubble: "Even a billionaire can talk like a fool. Gold hit a high of $850 back in 1980. Gold is now priced at $1,084, just 27% above its price of 27 years ago. How can Soros say gold is in a bubble? My opinion -- in view of the incredible recent production of dollars, the dollar should be substantially lower. Thus, it makes more sense to say that the dollar is in a bubble.")

There are lots of charlatans putting out investment newsletters -- but Richard Russell isn't one of them. He's been writing his newsletter since the late 1950s. Sure, he's had misses as well as hits. And I'm no expert on Dow Theory. But the man is worth listening to.

Comments

[David]

John,

Was just commenting on Twitter about how Russell has completely turned south on Obama (and especially his economic team) in the past year.

I remember him being guardedly optimistic on Barry back in '08 (Russell hoped he would back away from war as an "outsider") but he has done a complete turnaround, to say the least.

And of course, he usually has some very interesting and wise words to say on the markets and the economy (highly recommend his letter to all). Thankfully, my library subscribes to the R-man's letter, so I can go over and catch up any time I'm free.

[John]

David: Russell writes a great letter, and you're lucky your library gets it. I haven't checked mine lately, but it didn't used to.

I think lots of people liked Obama because they thought he'd have a much more non-interventionist foreign policy. And they hoped he'd centrist on domestic issues. But so far, and let's stress we're only 1/4 of the way through his term, some very disappointing things have been happening.