The Market is telling us that things are better NOW than they were 12 months ago.
The Market is telling us that prospects are better in the Future.
Listen to the Market–The Market is never wrong.

You only get these “hallucinations” on TPC–AWF

Russell, as well as other technical analysts, never have a crystal ball. They merely watch the windsock of market. It won’t take much to reverse his bullish call, all he need is Industrial and Trannie close below July low jointly. So longing stocks in any pullback from now would be low risk trade. Russell also made infamous bullish call in May 2007, but it did not cost him a dime since Dow theory sell signal flashed at same price level after six months.

I get the same impression. His wisdom is endless, but Dow Theory no doubt has holes in it. I prefer to use it more as a supplement to many other indicators. It is by no means the end all.

Van71,

Is that maybe a different timeframe than Russell uses? Looks like a long-term chart….

Isn’t that precisely why he’s skeptical and “willing to sit tight and watch the show”? He’s a bit cryptic in his message but seems to be unwilling to buy in although somewhat hamstrung by traditional Dow theory. I don’t know if the full text makes it more clear what his intentions are.

I think this shows the failings and weakness of Dow Theory as it doesn’t take into account enough factors to judge the market. Dr. Hussman’s method, for instance, takes into account a number of internal measures to ascertain the sustainability of a market advance and other economic factors. We don’t know exactly what he looks at as it is proprietary, but he obviously has not trusted this rally. Unfortunately that has kept him out of a large advance, but only the fullness of time will show whether that will be a wrong move. His is a pretty conservative approach, only wanting to take market risk when it is not just a gamble.

Chart 1.2.1; DJI went above Jan highs, DJT didn’t

It appears that you’ve misunderstood. The 66-74 period is referred to as a secular bear market, not a cyclical bear. And within that period were several cyclical bulls and bears. Over that time the stock market didn’t change much, starting and ending in the 80s on the S&P 500. But the valuation decreased over time, with P/E shrinking. A secular bear doesn’t have to go down in the nominal measure of the market index, but it does create better valuations at the end to launch a new secular bull market.

All the extreme intervention in the markets with aggressive monetary and fiscal policy has undoubtedly changed some of the dynamics at play here and made historical comparisons difficult. But Mr. Russell and people like Dr. Hussman are skeptical about this rally or cyclical bull because it does not have the marks of a sustainable move that characterized previous cyclical bull markets. The participation has been narrow with decreasing volumes, and many other internal measures look more like the short lived rallies in history rather than like sustainable bulls.

Maybe there’s a new paradigm at play here but it’s doubtful that’s the case. Instead this looks more like the extreme movement during the last big credit crisis/debt induced economic downturn that brought on deflation and huge structural changes; the ’29-’32 market. Time will tell.

But I don’t think Russell sends conflicting message here. All he is trying to say is that he is long term bearish, intermediate term bullish, short term bearish. And his strategy is to pick up a spot and buy pull back (swinging on pitches he like).