Richard Russell, the bearish author of the Dow Theory Letters, recently warned that a major primary bear market signal had been confirmed and that stocks were headed lower as a result.
In his latest Dow Theory Letter, he warns that equities could have quite a distance to fall from here.
Via King World News, Richard Russell:
“How far will the bear market carry? No one knows. Already all of 2012’s gains have been wiped out. There’s a number down there to where the bear market is heading. I don’t know what that number is. Dow 8,000? Dow 6,000? Dow 4,000? Dow 2,500?”
“The number could be any one of these. What I hope is that we get to that number as quickly as possible. I just hope we get the pain of the bear market over as fast as possible. One mistake is to think we know how costly the bear market is fated to be — and how far the bear market will carry. The Primary trend is a law unto itself. It will continue until it dies of exhaustion.
In the meantime, the bear market goes on. I’m afraid it has a long way to go.
Russell also thinks gold is poised to rise without a significant correction, seeing a lot of bullish catalysts on the horizon given macro and sentiment factors:
Gold is finally above 1600 again, and I think it has moved into a buying range. I no longer see a BIG correction ahead for gold. As the euro and other junk fiat currencies weaken, there will be more and more buyers of gold — including confused central banks.
Retail sentiment for gold is now low, which is bullish for the metal. I’ve been sitting with all my gold and paper gold. I’ve been determined that I’m not going to be knocked out of gold by sentiment or rumours. Trade it and you trade it away. I still think gold will be the last man standing.”