Richard Russell – Financial Knockout, Gold & Zuckerberg

Wednesday, June 13, 2012
By Paul Martin
June 13, 2012

With continued volatility in global markets, the Godfather of newsletter writers, Richard Russell, cautioned that “The most bearish action would be the Fed triggering QE3 and the market failing to rally.” Russell also warned of a “rising risk of a financial catastrophe.” Here is what Russell had to say: “That bear market signal in early May — did it work or was something else going on? From its April low, the Dow has rallied back strongly, and I’ve been wondering, ‘Is something else going on, something more ominous than simply a bear signal for the economy and stocks in the United States?’”

Richard Russell continues:

“I received the Dow Theory bear market signal in early May. And I confess that I was a little nervous about calling it a bona fide bear market signal. You can be bullish and wrong and your subscribers will forgive you. But if you’re bearish and wrong — they consider it worse.

To be bullish and wrong means that your subscribers are holding stocks in a bear market, and to me, that’s the worst market sin of all. It’s OK to miss a rally, but it’s not OK to take a big loss. So I stuck with my bear call. I told subscribers that the market does not have to fall apart immediately following a bear signal, and this market rallied following the bear signal.

So we’ll see what lies ahead. After yesterday’s action, I would think that Bernanke would be gassing up the helicopters. Bernanke just needs a tiny excuse to give us QE3. So load ’em up, Bennie! The most bearish action would be the Fed triggering QE3 and the market failing to rally.

Could the May bear signal have even more significance than I imagined at the time? Was it a signal for a global contraction or depression? What happens if Greece (‘Grexit’) exits the euro zone? Nobody knows, but what pessimists are worried about is that it might set off a contagion with Portugal also leaving. And then there’s little Ireland and much bigger Italy. What about shaky Spain? The word is that ‘Spain is too big to fail, and Spain is too big to bail.’

The Rest…HERE

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