Newsletter guru Richard Russell warned yesterday about a megaphone pattern and other bearish technical indicators.
Today he warns off the fan-line principle:
Warning — I have applied the “fan-line principle” to the NYSE Composite Index. Here we see three consecutive trendlines violated. According to the fan-line principle, three trendlines are drawn from the same base. When the third fan-line is violated the trend has reversed and turned down. Based on this chart (below), I would not be holding stocks at this point.”
He recommends investing in gold before China sets off a massive gold rally:
To compete, I believe that somewhere head the US will have to back its current irredeemable fiat currency with gold. In order to do that, the US will have to boost the price of its huge gold hoard to a level where the dollar may be backed anywhere from 50% to 100% with gold. That could mean unilaterally raising the price of gold to maybe $5000 and ounce or more…I thought that gold, closing higher, in the face of the stronger dollar, was significant. Gold appears to be advancing against almost all fiat currencies (is this a preview of the future?).