The latest random thoughts from Richard Russell:
“I’ve given up on the odds of the Dow and the Transports bettering their May highs. This, I think, is the main fact that we should deal with. This, from a Dow Theory standpoint, tells us that the market will do one of two things: it will mark time or it will go down. The only thing worse than being bored in the market is to lose money. Therefore, I personally will stay on the sidelines until the market tells me something — something more than it has so far. I don’t mind being bored, but I do mind losing money stupidly.
Meanwhile the whole world waits on Bernanke and his speech Friday at Jackson Hole. My guess: he’ll try to talk the market up while doing nothing. Good luck to me, my subscribers, and Ben Bernanke. I’d rather be bored than broke.
Dangerous market – Joe Granville notes that he got a major sell signal on August 17. The Dow on that day rose to a record new high of 13,275.20, with half the Dow Industrial stocks closing down on that day. Joe says, “I saw it as the most bearest upside non-confirmation ever recorded.” I would heed Joe’s warning. This market is being held up by a few choice Dow Industrial stocks. Like Joe, I do not trust this market. It’s being held up by a few stocks in the hope that Bernanke will save us. If the Jackson Hole speech on Friday is a disappointment, watch out. But we already have our danger signals.”
Source: Dow Theory Letters
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.