richard russell - the stock market is on the edge of a crash

Richard Russell - The Stock Market Is On The Edge Of A Crash

With continued chaos around the world and uncertainty in global markets, today KWN is publishing an incredibly

powerful piece that was written by a 60-year market veteran. The Godfather of newsletter writers, Richard Russell,

has issued a major warning that the stock market is now on the “edge of a crash.”

© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast,rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.

February 3, 2014

Russell: “As I write, fiat currencies around the world are sinking. Normally when this happens, gold will surge. But rising gold would be a red flag waving in the Fed's face, and there's no doubt in my mind that the Fed hasbeen manipulating gold and preventing its rise.

I've been thinking about bull and bear markets. Bull markets are man-made, they are a product of man's desire formore and more, a product of man's insatiable greed. During a bull market investors disregard their need for God. After all, they are loaded with money, money made on their own, without the help of God. During bull markets,God is put aside and forgotten.

I believe bear markets are made by God. Bear markets remind men that their greed and crime must be atoned for. In bear markets investors become frightened and once again they seek the help and comfort of God. In bearmarkets the crime and greed of the previous bull market comes to light. Bear markets are God's way of cleansinghumanity. In bear markets the dirty water streams out from under the closet. In bear markets men turn to Godagain for peace and help and comfort.

I’d be lying if I said that I wasn’t worried about the way things are going. Frankly, I’m truly scared for myself, myfamily and the nation. I have the sinking feeling that the stock market is on the edge of a crash. If that happens,investor sentiment will turn quickly bearish. And the bear market will start feeding on itself. Ironically, the recentaction occurred in the face of almost insane bullishness on the part of the crowd and on the part of investors.

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Obviously smart heads and institutional money managers know that the US is semi dead in the water. And all thetalk about an improving economy is just wishes and hopes. Bernanke’s dream of a flourishing new economy,improving without the need of the Fed’s help, is an idle dream.

I’ve been writing about the stock market for over 60 years and I can’t remember a time when I was so filled withforeboding regarding what lies ahead. The primary trend of the market, like the tide of the ocean, is irresistible,and waits for no man. What scares me the most in this current situation is that I see no clear island of safety.

In previous bear markets, such as 1973-74, I moved myself and my subscribers into cash, and all seemed well. Inthis bear market, I’m puzzled as to where safety lies. I have picked gold and silver … Time to repeat the Lord’sprayer with conviction. It’s no fun writing an advisory report at this juncture.

Question -- will Janet Yellen pursue the same course that Ben Bernanke has chosen? Or will she finally take theFed's heavy hand off gold? My guess is that she will follow in Bernanke's path and manipulate gold whilecontinuing to print Federal Reserve notes by the trillions.

One amazing thing about a primary bear market is that it tends to expose all cheating and lying and criminalactivity. As Warren Buffet put it, when the tide runs out at the nudist camp, the bathers can finally tell the menfrom the women.

Following the great crash of 1929, the market rallied into 1930 in a huge upside correction of the crash. The Dowhit a high in January, backed off during the month of February and then rallied to a second lower peak in March. Following its second lower peak, the Dow resumed its bear market action and headed persistently lower. It washere that the US economy started to fall apart in earnest.

If Bernanke understood markets he'd understand why he's now fighting a losing battle with the US economy. Byspending trillions of dollars at the 2009 lows, the Fed was able to trigger a huge and overdue upward correction ofthe crashing primary bear market. Thus, the bear market was temporarily held back.

Returning to the present, the great market advance since the 2009 low was actually an upward correction of thebear market that started in 2000. All the market action since 2000 has been part of a huge, slow-building top. If wefollow the 1929 pattern, the Dow may now decline for a month and then rally to a second lower peak. Followingthe second lower peak, the Dow will then decline persistently as the bear market resumes in earnest. As thesituation becomes progressively more bearish, my best guess is that Yellen will continue to fight the primary beartrend with all the ammunition at the Fed's command.

With the “down January” and the market suddenly stalling, I expect public sentiment to lose its good-timegiddyness and to slowly turn bearish. I also expect the new bearish sentiment to feed on itself. I believe thepublic will soon demand HONEST statistics and data from the government. Remember, once the bear market isestablished, all the lying and nonsense will come to an end.

Late Notes -- It should come as no surprise to subscribers that the stock market got whacked badly today. Today Ireceived a clear sell signal on the point & figure chart of the Dow, which suggests continued selling. Once themarket is oversold, I expect a good rally, which will take the Dow close to the previous high. When that rallydeteriorates and declines, I expect the market to embark on an extended and frightening bear market decline.

I expect steady bear market deterioration in the US economy to continue from here, regardless of what the marketdoes. Already I hear talk of a possible 10% correction. These people are wrong. This is not a correction. It's acontinuation of the bear market. Meanwhile, gold's upward creep turned into a surge today, with gold up $20.”

To subscribe to Richard Russell’s Dow Theory Letters CLICK HERE.

© 2014 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linkingdirectly to the blog page is permitted and encouraged.

IMPORTANT - Due to the continued market turmoil, KWN will be releasing interviews all day today.

The audio interviews with Egon von Greyerz, Dr. Paul Craig Roberts, Nigel Farage, James Dines, Gerald Celente,

Michael Pento, Eric Sprott, Andrew Maguire, Rob Arnott, William Kaye, David Stockman, Art Cashin and Dr. Marc

Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.


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Eric King

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richard russell - the stock market is on the edge of a crash

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