Richard Russell – Is Anything Safe In Our New World?
July 3, 2012
With continued uncertainty surrounding global markets, the Godfather of newsletter writers, Richard Russell, asked an important and intriguing question, “Is anything completely safe in our new world of central bank fiat paper?” Russell also discussed gold at length, but first, this is what Russell had to say about the action in stocks: “I wanted a mechanical way to follow the secular (primary) bear market. This required a moving average that was insensitive to secondary reactions and also insensitive to cyclical (short-term) bull and bear markets. In other words, I needed a long-term moving average that would portray the primary trend while screening out most minor and secondary movements.”
Richard Russell continues:
“After much experimenting, I came up with a 233-week moving average. The chart below starts in the year 1983 and continues to the present. The 233-week moving average is the curved blue line. (233 is a Fibonacci number: 144 + 89 = 233.)
If we are now in a secular bear market, then the 233-week moving average should trend mildly southward. Towards the end of the bear market, the decline in the moving average should accelerate as it heads down.