WHOA!

Richard Russell, the famous writer of the Dow Theory Letters, has a
chilling line in todays note:

Do your friends a favor. Tell them to
"batten down the hatches" because theres a HARD RAIN coming. Tell them
to get out of debt

and sell anything they can sell
(and don’t need) in order to get liquid. Tell them that Richard Russell
says that by the end of this year they won’t recognize the country.
They’ll retort, "How the dickens does Russell know — who told him?"
Tell them the stock market told him.

Thats pretty intense!

Update: By popular demand, heres more on what he
sees in the market. The gist is that the markets recent gyrations are
telling him that the economy is in trouble:

And I ask myself, "Am I seeing things?
The April 26 high for the Dow
was 11205.03. The Dow is selling as
write at 10557 down 648 points
from its April high. If business is
even better than expected, then
why is the Dow down over 600 points?
And why, if there were 674 new
highs on the NYSE on April 26, were
there only 20 new highs on Friday,
May 14? And if my PTI was 6133 on
April 26, why is it down 17 points
since its April high?

The fact is that I’ve been
seeing deterioration in the stock market
ever since early-April, and
this in the face of improving business
news. The
D-J Industrial Average is composed of 30 internationally
known
top-quality blue-chip stocks

. These are 30 of "Americas biggest
companies." If Barrons is so bullish on the future of Americas

biggest companies, then why isn’t the Dow advancing to new highs?

Clearly something is wrong. But what could it be? Much as I love

Barrons, I trust the stock market more. If I read the stock market
correctly, its telling me
that there is a surprise ahead. And that
surprise will be a reversal
to the downside for the economy, plus a
collection of other
troubles ahead.

About Dow Theory — First, we
saw the recent April highs in the
Averages. Then we saw a plunge in
both Averages to their May 7 lows —
Industrials to 10380.43,
Transports to 4298.12, next a short rally. If
ahead, the two
Averages turn down and violate their May 7 lows, that
would be the
clincher. Such action would signal the certain resumption
of the
primary bear market.

Just as for years I asked, cajoled,
insisted, threatened, demanded,
that my subscribers buy gold, I am
now insisting, demanding, begging
my subscribers to get OUT of
stocks (including C and BYD, but not
including golds) and get into
cash or gold (bullion if
possible). If
the two Averages violate their May 7 lows, I see a
major crash as the
outcome. Pul – leeze, get out of stocks now, and I
don’t give a damn
whether you have paper losses or paper profits!

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