the dow~ richard russell comments

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    February 5, 2003 -- I'm writing this Tuesday night. And as I was working my way through the daily pile of magazines and advisories, a thought came to me. Everybody's asking, "What do I buy now? What do I do with my money?"

    I've already said -- be in gold coins and gold shares. What about this? How about being in cash? What's wrong with cash? The dollar may look like trash to foreigners, but to we poor slobs in the US -- cash is not trash.

    What's wrong with just being in gold and cash? Then if or when we get to the bottom of this leg of the bear market, we can take our cash and buy into what I believe should be a profitable rally. I continue to expect the October lows to be taken out. I continue to expect a series of 90% downside days. I continue to expect a real capitulation and a true smash on the downside somewhere ahead.

    So what's wrong with sitting with gold and cash, and waiting for the best time to step back into the market and play what could be the best (and possibly the only great) rally of this bear market?

    At any rate, that is my advice. That's it -- instead of messing around, trying to buy this or that stock or bond so that you can pick up some income or hopefully some capital gains.

    My gut feeling is that there aren't going to be any good buys anywhere until we get a culmination of this down-leg of the bear market. I think we'll see the real bottom somewhere between now and October-November of this year. Remember, we're more than halfway through the so-called "good six months" of this year. And so far, the "good six months" have been anything but good.

    What will the "bad six months (end of April to end of October) look like? The "bad six months" could be a real wipe-out leading to a great tradeable bottom -- not necessarily the final bottom, but nevertheless a really excellent place to buy stocks prior to a major corrective advance.

    Anyway, that's pretty much the way my thinking runs, and that's pretty much the way I'm playing it. I've got all the gold and gold shares I want. Any money that comes in now I've been holding in T-bills until I think we're at a true "wipe-out" or capitulation bottom in the market.

    How will you know when that kind of bottom arrives. I'll tell you, that's how you'll know.

    Memories -- Subscribers who were with me during the late '70s remember this phrase well --

    "There's no fever like gold fever."

    Is this phrase about to be revived? It's too early to tell, but it does seem that the gold choo-choo train is slowly emerging from that long dark tunnel and it now chug-chug chugging down the track.

    The smart boys are telling us that gold is rising because of declining gold production. Bull sh*t -- we old timers know better. Gold moves when people get the fever.

    Steel and copper and sugar and oats move on production numbers. Gold mover on human emotions. And believe me, there's no fever like gold fever. I'm not saying that the fever is here yet, but I'll tell you something -- I'm getting little hints that the fever might not be far off.

    Wednesday before the close. I'm back from chelation. My old chelation doctor is suffering from a brain tumor and had to quit. So I returned to El Cajon where I used to get chelation treatments years ago (El Cajon is twenty minutes from La Jolla). It was like old home week. Hugged my old friend, Yu-An (a nurse) who was just back from visiting her dad in Bejing. She said her father is fine and Bejing is in very good shape, business is booming.

    I've got my speaking engagements down to a precious few. But I will be speaking via TV at the Atlanta Investment Conference held in the North Georgia Mountains. It will be this organization's final meeting with proceed going to support the "Friends of Autism Foundation" (I have an autistic daughter). Many newsletter writers and Wall Street speaker will be there. This final conference will be limited to just 175 people and will soon be sold out. It's always a great and instructive weekend at the Atlanta Conference to be held April 24-26. www.atlantainvestmentconference.com or 1800 864 0014.

    TODAY'S MARKET ACTION -- Market was up earlier in the session with the Dow up over 130 points. After the Powell speech the market sold off with my PTI down 6 to 5218. The moving average is at 5240. The PTI remains bearish.

    The Dow closed down 28.11 at 7985.18 with no Dow movers today

    March crude was up .35 to 33.93.

    Transports were up 11.04 to 2154.42.

    Utilities were down 2.53 to 204.35 and looking on the "sick" side.

    There were 1415 advances and 1840 declines. Up volume was 426 million and down volume was 908 million. Down volume was 68% of up + down volume.

    There were 49 new highs and 50 new lows. My High/Low Index was down 1 to minus 7029,

    Total volume on the NYSE was 1.42 billion shares making this another "distribution" day.

    S&P was down 4.61 to 845.56.

    Nasdaq was down 4.66 to 1301.49, a new low for the move. Nasdaq volume was 1.35 billion shares, making this a "distribution" day.

    My Big Money Breadth Index was down 6 to 651 -- this was a new bear market low, and I believe a very important new low!!

    March Dollar Index was up .62 to 99.91. March euro was down .73 to 107.86. March yen was down .18 to 83.45.

    March Nikkei was up 60 to 8485.

    Bonds were lower; the March 30 year T-bond was down 101 ticks to 111.24 to yield 4.86%. March 10 year T-note was down 16 ticks to 113.29 to yield 4.00%.

    April gold hit 390, reversed and closed down 2.70 to 377.20, but gold did not fill the gap just below its closing price. March silver was down 15 to 4.76. April platinum was down 1.60 to 674.44. March palladium was down 3.50 to 264.50.

    Gold/Dollar Index ratio was down 5.00 to 277.60.

    XAU was down 3.48 to 76.16. HUI was down 6.37 to 143.76.

    Gold advance-decline line was down 19 to 1138.

    AU down 2.19, DROOY down .17, GG down .50, GFI down .59, GLG down .88, HL down .22, HMY down .97, NEM down 1.07, RGLD down 1.68. PDG down .64.

    Gold super-volatile and highly nervous. When you ride gold in this area, you're riding a Brahma bull. Get used to it.

    STOCKS -- My Most Active Stock Index was down 9 to a new bear market low of 145!!

    The 15 most active stocks on the NYSE were -- EP down 1.88, AOL down .51 to 10.56, GE down .05, NT up .01, AIG down .82 to 50.88, EMC down .09, DYN up .23, PFE down .09, C down .29, GT down .65, XOM down .48, TYC down .01, WFC down 1.43, MOT down .13, PCS up .31.

    More -- HPQ down .40, MER down .41, FNM down .12, JPM down .11, MWD down .42, CSCO unch., YHOO up .04, MSFT down .36 to 46.98, KO down .28, AA up .52, KSS down .54, TGT up .09, and one that I've been watching closely -- WMT down .41 to 46.74 and breaking to its lowest level since August of last year.

    VIX up .14 to 36.84 and option-writers continue to be nervous.

    McClellan Oscillator at minus 84 and still in negative territory.

    CONCLUSION -- I thought the most significant action today was the new bear market lows in both my Most Active Stock Index and my Big Money Breadth Index. Both of these suggest to me that we're going to break below the bear market lows set last October.

    As for Powell's speech, he emphasized that Saddam was not cooperating, a rather vague accusation, but one that's hard to disprove or prove. I think it all boils down to this -- We've got over 100,000 troops plus God-knows how much equipment lined up and ready to go in the Mideast. I find it hard to believe that we're just going to bring all that back. It would be too much of a loss of face for Bush and probably at this point for the US.

    So it's "Don't bother me with facts, don't bother me with non-facts, don't bother me -- period. Saddam is an SOB, and we're going in." And we will go in. "Furthermore, if the UN doesn't back us, then they're not doing their duty, and they're spineless and next to useless." That's the way I see it going. And I think that's about the way the market took it.

    Gold was up on a stilt and needed correcting. And it got correcting. Today's action was just another way for gold to warn the public -- "Hey suckers, you see how dangerous it is to buy and to hold this useless yellow relic of a bygone era."






    DEAR RICHARD,

    Your letter has helped me through the last 5 years avoid stock market losses as well as make several hundred thousand dollars using the intermediate trend within the primary trend and Profunds, URPIX and USPIX.

    I have been feeling bad that I have been listening more to your friend Bob Prechter in the Gold arena and thus attempting to be "cute" and catch the called-for bottom around 200 an ounce.

    Nevertheless, if one is or will be smart enough to take your advice on buying physical (I know how) when does one take profits? In the case of purchasing insurance on your money (gold) when gold is in the ionosphere what will be the medium to transfer this "paper" gain into something usable. Will we be in situation where society breaks down as the welfare state collapse and if you take your Gold coin to the store to buy something you will be mugged. Or worse you will be followed home and have your Gold stash liberated from your hiding places? I truly do not mean to be a smart ass. I have pondered this question for some time, and this may be a reason why I have been using the Elliott Wave scenario to drag my feet. I think just accumulating it and holding through the new bull market as you say is a huge feat, but how the heck are we going to make use of it in the END.

    Could you address this subject in your comments?

    Steve H.
    Guam USA

    Russell answer -- One thing at a time. Let's not worry about what to do with gold when the gold bull market is over. Let's just get into the bull market. By the time the gold bull market is over, maybe I'll have brains enough to think of where to put our "amazing profits." Or maybe we should hold the gold until we die, and just be buried under a pile of assorted gold coins.


 
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