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Richard Russell Of Dow Theory Letters Fame Turns Bullish

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I have been a long term follower of Richard Russell of Dow Theory Letters fame. He has just turned cautiously bullish on the markets.......

July 27, 2010 -- The world has been turned upside down. I guess that's what you might think if you read yesterday's site. But no, it's the same old world. The difference is that on Wall Street we received a Dow Theory bull signal yesterday. This occurred when both the Industrial and Transport Averages broke out to close decisively and simultaneously above their June highs.

I'll admit it -- I really didn't expect it. But the stock market doesn't arrange itself to live up to Richard Russell's expectations. The stock market is a law unto its self. The stock market owes me or anyone else nothing. The FACT is that the situation has changed. In breaking out above their June highs, the Averages are saying that the market trend has reversed from down to up. Argue with that at your own risk.

I explained what I personally intend to do about yesterday's action. But each investor's position is different. In view of my financial position and my age, I don't feel any urge to play the upside of this market, this despite the Dow Theory bullish signal. That fact is that at this stage of my life, risk vs.reward plays a very large part in my actions.

However, this does not apply to the great majority of my subscribers. If you are bold and willing to speculate and take risks, I outlined a plan you might follow. It's simple -- buy a quantity of DIAs that you feel comfortable with, place a mental stop loss under your purchase price (maybe 8% under) and get in on the fun.

That in a nutshell, is my stance on this market. I might add that after yesterday's surge in the stock averages, it would not be surprising to see the market back off today. This could be the proverbial "step backwards to give it the energy to surge higher again."


My PTI was unchanged at 6126. The moving average at 6091, so my PTI is bullish by 35.

The Dow was up 12.26 to 10537.69.

Transports were down 58.59 at 4423.50.

Utilities were up 6.56 to 395.34.

NASDAQ was down 8.18 to 2288.25.

S&P was down 1.17 to 1113.84.

August crude was down 1.48 at 77.50.

Total Volume on the NYSE and associated exchanges was 4.99 bn.

There were 1332 advances and 1686 declines on the NYSE.

There were 246 new highs and 9 new lows.

The Big Money Breadth Index was up 10 at 817.

Dollar Index was up 0.05 at 82.29. Euro was unchanged at 129.88. Yen was down 1.42 to 113.75. Currency prices as of 1 PM Pacific Time.

Bonds: Yield on the 10 year T-note was 3.05. Yield on the long T-bond was 4.08. Yield of the 91 day T-bill was 0.15%.

August gold was down 25.10 to 1158.00. July silver was down 0.574 to 17.62.

My Most Active Stocks Index was up 7 to 223.

GDX was down 1.75 to 47.14.

HUI was down 15.07 to 432.26.

CRB Commodity Index was up 2.20 at 264.46.

The VIX was up 0.38 to 23.11.

Late Notes - A mixed day with the Dow up and the Transports down. The market internals were sloppy. Breadth on the NYSE was down. Down Volume was 56% of up+down volume. Dollar Index up a bit, bonds down and August gold down 25.10 to 1158.00. Gold still above 1100. Head and shoulder pattern in gold breaking down but as I have said so many times before - I count my gold in ounces not in the dollar price. Gold will be wealth when fiat money is a footnote in the history books.

Closing out for Tuesday.

The R-Man

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