In Which Richard Russell Feels Sorry for the Bears….

What can you say about a market where one of the biggest permabears of the last 5 years is now feeling sorry for the bears?  I’ve tracked Russell’s work very closely over the years and I have to start wondering about the contrarian side of the cyclical view when I start reading commentary like this (via Russell’s Dow Theory Letters):

“I can’t believe I’m saying this, but I really feel sorry for the bears. First, they rubbed their hands together in glee as they waited for the roof to cave in via the fiscal cliff. Nothing happened. Then they got excited over the sequestration menace, and again nothing happened. Cyprus came and went, so what’s left? Oh yes, the debt ceiling — which, if it isn’t lifted, should collapse the economy. And it does seem we are in a currency war. Japan’s new central bank president startled the world by doubling its QE quotient. Japan, copying the Bernanke recipe, will buy everything in sight until Japan experiences 2 percent inflation.

How can I explain the weird disconnect between the stock market and reality? I fall back on the old Wall Street aphorism — “The market always does what it’s supposed to do — but never when.” I feel most sorry for the impatient bears. Waiting on the market to do what you think it should do can try one’s patience and nerves.

It looks as though the stock market will continue to head north until we receive indications that something is wrong. So far, nothing in the price structure has told us to be cautious. My guess is that this stock market will, when it is ready, produce some kind of “warning pattern,” such as a formation (H&S pattern) or a distinct non-confirmation in the Averages. Until then, my suggestion is to stay with your position in the DIAs.”


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Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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  • Karl

    Roubini has also turned bullish for 2 years while he believes the central banks will prop up assets per cnnmoney

  • Boston Larry

    When the last celebrity bear throws in the towel and turns bullish, that will be the time to sell. Has Rosie turned bullish yet? (I am excluding Hussman because he will never change).

  • JCB

    I will take profits when John Hussman turns. Until then onward bull!!

  • GordonX

    5 NOVEMBER 2009

    I don’t believe most investors understand the significance of the possibility that the March to October rally was an upward correction in a bear market. The majority of analysts believe that the advance that started from the March lows represented the beginning of a new bull market. I disagree, and I’ve explained in detail why I do not believe March marked the start of a new bull market.

    For the sake of argument, let’s just assume that I’m right and that what we’ve seen since March was a bear market rally. If that’s true, we’re in a very dangerous situation. It appears to me that the rally is in the process of topping out. Again, let’s assume that we’ve been in a bear market rally. If the rally is indeed topping out, then the stock market will soon be again in the grip of the bear.

    The rally ran from March to October, a period of seven months. In other words, the bear market has been “held back” for a period of over half a year. My thinking is that the bear is “angry” at being held back, and it will probably want to make up for lost time in the period ahead. From everything I see, hear or read, I gather that almost everybody believes the March lows are safe, that they will not be violated, no matter what.

    However, if the bear market rally is now in the process of breaking up, my thought is that stocks could decline very rapidly, much faster than most people are prepared for. If late-coming traders suspect that the rally is over, we could see a frenzy to get out of this market. This along with a panic from pros who want to get out with what profits are left.

    Source: Dow Theory Letters


    Richard Russell: ‘GET OUT OF STOCKS’ Gus Lubin | Dec. 15, 2011, 1:59 PM | 10,554 | 38 Wow. Richard Russell’s latest newsletter may his most bearish commentary yet. Russell says the greatest sucker’s rally in history is coming to a brutal end. He says you should start …


    Adviser Says Trade Stocks For Gold . The Telegraph – Nov 2, 1993 Richard Russell, who has edited his Dow Theory Letters 1759 La Jolla, Calif. … extreme A shift back to gold, and away from stocks and bonds, is imminent. …


    Stocks eye new highs, but bears still grumpy Pay-Per-View -San Diego Union – Tribune – Feb 11, 1995 But as Richard Russell of La Jolla’s Dow Theory Letters points out, … Stocks will plunge until July or August, leaving the Dow between 2800 and 3300, …


    Interest Rates Determining Market’s Course . Lawrence Journal-World – Apr 13, 1994 … says Richard Russell, editor of .the Dow Theory Letters. … Two weeks ago, however, his data turned down —forecasting a decline in stocks. …


    BEARS ON THE PROWL Pay-Per-View -St. Petersburg Times – Jan 2, 1995 Newsletter writer Richard Russell says you need to look beyond stocks to define a bear. In a true bear market, everything goes down – stocks, bonds, …


    Most pros see shaky mart, a few spot a bear Pay-Per-View -San Diego Union – Tribune – Mar 29, 1994 Noting that stocks bounced upward from key technical levels yesterday, … in a bear market here,” says Richard Russell of La Jolla’s Dow Theory Letters. … Some say bear now prowling markets San Diego Union -Tribune (Pay-Per-View)


    Dow Rally Continues as Fed Cuts Key Rate Pay-Per-View -Los Angeles Times – Jul 14, 1990 Stocks advanced as the Federal Reserve acted to push market interest rates lower by … “I still think we’re in a bear market,” says Richard Russell, …


  • esb

    Actually, Hussman probably will change, and the change will probably be when he closes out his funds and enunciates that he no longer understands the markets or is unwilling to run money in an environment in which asset values are set over at the Marriner S. Eccles Building.

  • GordonX

    It is the somewhat gratifying lesson of Philip Tetlock’s new book, “Expert Political Judgment: How Good Is It? How Can We Know?” (Princeton; $35), that people who make prediction their business—people who appear as experts on television, get quoted in newspaper articles, advise governments and businesses, and participate in punditry roundtables—are no better than the rest of us. When they’re wrong, they’re rarely held accountable, and they rarely admit it, either. They insist that they were just off on timing, or blindsided by an improbable event, or almost right, or wrong for the right reasons. They have the same repertoire of self-justifications that everyone has, and are no more inclined than anyone else to revise their beliefs about the way the world works, or ought to work, just because they made a mistake. No one is paying you for your gratuitous opinions about other people, but the experts are being paid, and Tetlock claims that the better known and more frequently quoted they are, the less reliable their guesses about the future are likely to be. The accuracy of an expert’s predictions actually has an inverse relationship to his or her self-confidence, renown, and, beyond a certain point, depth of knowledge. People who follow current events by reading the papers and news magazines regularly can guess what is likely to happen about as accurately as the specialists whom the papers quote. Our system of expertise is completely inside out: it rewards bad judgments over good ones.

  • bart
  • Mr. Market

    Anyone who looks at the proper indicators sees that a number of (bearish) divergencies have emerged in the last 4 months.

  • Mr. Market

    When one carefully reads Russell’s thoughts then he’s far from bullish. He hasn’t surrenderd to the bulls, at all. But he has some second thoughts.

  • Mr. Market

    The sheeple are lining up for real estate (AGAIN) and people are using their home as an ATM machine (AGAIN). That tells me that we’re VERY close to a dramatic end. Everytime investors/the sheeple want to invest in real estate then the end is near.

    Very bearish.

  • Anon

    I guess its hard to argue with three years worth of data…