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Famous Dow Theorist Richard Russell has been bearish on stocks for as long as we can remember.But in his latest newsletter, he shocked us by recommending that his followers should buy stocks via the Dow Jones Industrial Average.
Here’s an excerpt via King World News:
Yes, I know that this market is uncorrected during its long rise from the 2009 low, and I know that there are risks in buying an uncorrected advance that is becoming uncomfortably long in the tooth, but my suggestion is that my subscribers should take a chance (after all, Columbus took a chance) and take a position in the DIAs. If you buy the DIAs, I suggest that you place a mental stop loss 8% below your purchase price. Losses in investing are inevitable, but losses should always be limited.
By taking a position in the market, you’ll be casting yourself on the side of the optimists, and you’ll also be casting your vote on the side of Ben Bernanke and the Feds. Besides, it’s fun to be able, for once, to place yourself on the cheerleaders side of the US markets, and it makes sense to be on the side of America’s Federal Reserve.
Russell believes that stocks will go up as long as Ben Bernanke is running things at the Federal Reserve. Furthermore, he believes there will be plenty of warnings before the Fed decides to tighten.
Even Russell recognises how unexpected this call is.
“Wait, I didn’t mean to place a sarcastic overtone on the above,” he writes. “I really believe that subscribers should take a flyer on this market. After all, after weeks of flirting with a new high in the Industrial Average, the Dow finally confirmed the previous record high of the Transportation Average. With the Industrials and the Transports both in record high territory, I think being in the market is justified under Dow Theory.”
So there you have it. One of the stock markets biggest bears just flipped.
Read more at KingWorldNews.com.