The following is an excerpt from Richard Russell's Dow Theory Letters
IMPORTANT: Dow Theory — The Dow Jones industrial Average recorded a high of 13,279.32 on May 1, 2012. This Dow high was not confirmed by the Transports. The two averages then turned down and broke below their April lows. This action confirmed that a primary bear market is in progress — it was a textbook bear signal.
Russell comment — I consider the April-May action to be a continuation of a primary bear market that started on October 9, 2007 with the Dow at 14,164.53. We are now dealing with the latter part of the primary bear market that began in 2007. Subscribers should now follow a course of utmost caution. (The bear confirmation is particularly valid because nobody seemed to notice it nor did any analyst appear to be aware of it. I know of no analyst or advisor who stated that we had seen a primary bear signal!) For evidence, see charts of the Dow and the Transports below!
As for gold, I think it will be under pressure for a while, but before this bear market is over, gold will embark on a major bull move. The current correction in gold will test every "gold-bug's" nerves. The preferred gold position is to be in bullion gold coins.
Below, new high in the Dow on May 1.
Below, Transports fail to confirm the new May 1 high in the Dow.
Will Greece endure tough austerity measures demanded by the European Union and the International Monetary Fund in exchange for bailout funds, which would prevent the country from defaulting and allow it to stay in the Eurozone? Or will it reject the spending cuts, end the outside funds, and leave the currency union, attempting recovery alone?
There's a possibility that Greece will chose austerity, but it would surprise me. Which choice is the least painful choice?
Russell Note — I believe that the bear signal is telling us that Greece will default, to be followed by Spain, and the whole Eurozone may then fall apart.
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