Richard Russell turns bullish

Discussion in 'Wall St. News' started by trader99, Sep 8, 2005.

  1. trader99


    Richard Russell turns bullish
    Wednesday September 7, 9:25 pm ET
    By Mark Hulbert

    ANNANDALE, Va. (MarketWatch) -- Stop the presses! Richard Russell, editor of Dow Theory Letters, has turned "totally neutral on the stock market -- at least as to the secondary trend."

    I nominate this for the understatement of the year award.

    It actually represents a huge bullish turn for Russell, who has been almost exclusively bearish for six years now, especially given that he was making aggressively bearish noises as recently as the past couple of weeks.

    What changed Russell's mind?

    The first thing is the new all-time high in the Dow Jones Utility Average. According to Russell, "Normally, the Utility Average will hit its highs well before the final high in a bull market, although there have been times when the Utility Average topped out simultaneously with the bull market high."

    The second is a chart that has Russell "bug-eyed," one that he "stared at ... for half-an-hour in astonishment." Russell is referring to a particular point and figure chart for the (Vancouver:SPX.V - News) S&P 500 index that is designed only to show major reversals.

    (Point and figure charts are ones that technicians use to filter out minor price movements that are considered to be merely noise, enabling them to better focus on the bigger picture.)

    According to Russell, "The chart shows that if the S&P rises to 1,250, this would be a powerful upside breakout, with a large upside target hundreds of points higher."

    The S&P 500 closed Wednesday at 1,236.36, less than 14 points away.

    But there's more. On Russell's interpretation of this chart, rising above the 1,230 level also must be considered a breakout with at least some upside potential. That occurred on Tuesday. So odds appear to give a fighting chance of the bigger breakout above 1,250 occurring soon.

    As a result, Russell is now recommending that subscribers willing to speculate should purchase (AMEX:SPY - News) Spyders, the exchange-traded fund benchmarked to the S&P 500.

    Why has the market's chart patterns turned so suddenly bullish? Russell responds: "I'm not going to pretend that I know why the stock market suddenly turned strong ... From a speculator's standpoint, it makes absolutely no difference why the market turned strong. The reasons may be known in a few weeks or a few months. The important thing is simply the market action itself."

    Why pay attention to what Russell says, given that he has been wrong on more than one occasion in recent years? A number of you e-mailed me this question after previous columns in which I quoted him. In fact, one of you suggested helpfully that Russell must be paying me under the table to quote him.

    The answer, of course, is that I quote Russell because he has a good track record. In fact, when ranked on the basis of the performance of just their stock market timing recommendations, Russell's is in second place among all the newsletters the Hulbert Financial Digest has tracked since 1980.

    For the record, it should be noted that Russell remains fundamentally bearish on the stock market's longer-term trend. That is because, in his opinion, stocks are not currently cheap. So his advice remains unchanged for investors, as opposed to speculators: Stay primarily in cash.
  2. russell went bullish and cramer went bearish 2 days ago. who do you fade?
  3. trader99


    haha. LOL. Good point.

    A superbear throwing in the towel. Is that a contrarian indicator?

    A superbull turn bearish. Is that a contrarian indicator?

    Contrarian indicator isn't all it cracked up to be. hehe.
  4. I am still waiting for comstock fund ( charlie minter ) to turn bullish !

  5. ============

    Thanks trader99;
    think i may understand 99% of his technical remarks, like long SPY

    However Richard Russell remains'' fundamentally bearish on stock market longer term trend because stocks are not cheap''

    Does that mean if stocks /sector is cheap ;
    then thats bullish like DAL, NWAC??????????

    If thats what he means , bullish on DAL,NWAC;
    disagree with that-
    no wonder many people hate, & dont understand TA.:cool:
  6. osama also turned bullish after seeing how inept bush's amerika handled katrina's effects.
  7. if he's been wrong for say 2/3rds of the last 6 years, who cares?
  8. Babak


    I think this is being misinterpreted by many (including Stephen Vita over at Alchemy) because people are not familiar with RR's style.

    First of all, this guy is the real deal. He's written a newsletter, traded the markets and been a student of the markets for ever. He's seen everything pretty much. And he's made some face melting calls. Like in the face of the great 70's bear he picked the bottom. He also pointed out that the 2000 top was indeed a major top and not a 'correction'. He also was massively bullish on gold in 2000. Has he been 100% right? No, of course not. Who is?

    What you need to know is that RR always operates on two levels. One, primary trend and two, secondary trend. This call is like many others he has made over the years where he says, the primary trend is down but if you want to punt go ahead and get long. Usually he recommends playing this thru ETFs (DIA, SPY). He is payed by his subscribers to keep them in the primary not to catch every little swing. But every now and then when he sees an opportunity, he'll give out a short term counter trend call. And surprisingly he's usually right about these ST calls.

    When he says LT stocks suck. Its because they do. Remember he's looking LT and comparing real valuation gauges with the past. Anyone who does this will agree. Right now stocks in general are not 'cheap'. And Murray, no he does not mean buy 'cheap' stocks like airlines.

    For those that don't know, he's the "Oracle of the Dow" - the best interpreter of the Dow Theory we have right now. It'll be sad to lose him. Hopefully he can hang on for another 20+ years strong.

    And to boot he's half responsible for bringing this beauty to the world: