The very useful comparison of the current US stock market rally with that of 1982 is provided in the table below, courtesy of Barry Ritholtz, writer of The Big Picture blog.

It is when looking at the characteristics of a typical market bottom that one has difficulty seeing that the March ‘09 lows were in fact a primary bull market turning point. “Maybe this time it really is different, I guess we’re going to find out,” said Richard Russell (Dow Theory Letters).

Source: Barry Ritholtz, The Big Picture, November 18, 2009.

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The very useful comparison of the current US stock market rally with that of 1982 is provided in the table below, courtesy of Barry Ritholtz, writer of The Big Picture blog.

It is when looking at the characteristics of a typical market bottom that one has difficulty seeing that the March ‘09 lows were in fact a primary bull market turning point. “Maybe this time it really is different, I guess we’re going to find out,” said Richard Russell (Dow Theory Letters).

Source: Barry Ritholtz, The Big Picture, November 18, 2009.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

The paragraphs below are excerpts from Richard Russell’s latest Dow Theory Letters, arguing the case for gold bullion.

“Today I ask myself, where would I rather have my subscribers be - loaded up in the Dow Jones Industrial Average or loaded up with gold?. And in all honesty, I believe they are better off in gold than in the stock market with DIA.

“There are a number of items favoring higher gold now.

(1) Interest rates are at zero, which means the ‘opportunity cost’ of owning gold now is highly favorable. You sacrifice no yield in owning gold vs. Treasury bills. T-bills pay you nothing, so you might as well have your money in gold.

(2) The Bernanke Fed will evidently stop at nothing in its all-out attempt to ‘jump start’ the wobbly US economy. This means spending and building debt at a never-seen-before rate. This will

“I take the action of the stock and bond markets this week (and particularly today) very seriously. Extreme caution is advised. The primary trend of the market is bearish, and the secondary trend may now be turning down,” said Richard Russell (Dow Theory Letters) on Friday.

After equities’ seven month climb, stock markets certainly look vulnerable for a decline. Two downside reversal days - on Wednesday and Friday - would seem to indicate that stocks could commence a pullback to work off the overbought condition, allowing fundamentals to reassert themselves.

Bill King (The King Report) reported Art Cashin as saying that since June 2007 the Daily Sentiment Index (as published by Trade-Futures.com), which polls futures traders, has reported more than 90% bulls on the S&P only once. “When would you guess that time to be? July 2007? October 2007? Wrong. It was last

The trouble with being a contrarian is that you can never be quite contrarian enough.

We began having doubts about the ‘feds inflate… gold soars’ hypothesis last year. It was too easy… too obvious. And if it were that easy to inflate a nation’s currency, how come the Japanese couldn’t get the hang of it in the ‘90s?

So, we moved towards a contrarian position – inflation, yes… but not for a while. And gold? Well, we are in it for the long run. In the short run, anything could happen.

To clarify our view on gold, the Daily Reckoning is not bearish on the metal. It is not bullish on the metal either. It is buggish. We are gold bugs. In the long run, gold will retain its value. Since that’s all we ask of it, we are always satisfied. Even if it is down in the short

Gold bullion has risen by $105 (11.6%) since its low of July 9, breaching $1,000 a few days ago and now trading at levels last seen at an intraday high of $1,033 in March 2008.

Gold bulls argue that the yellow metal stands to gain from rising inflation expectations as governments engineer the biggest asset price reflation in human history. On the other hand, John Mauldin (Thoughts from the Frontline) is of the opinion the rise in gold does not really tell us anything about the future of inflation. It is his belief that if the Fed were to withdraw from the current economic battle, the forces of deflation would be felt in short order. Mauldin contends the answer to the question “Will we have inflation in our future?” is “You better hope so!” But gold may not be a bad performer in a deflationary environment either

I published a post a few days ago on the issue of whether stock markets were in a secondary (i.e. cyclical bull) or primary bull market.

I quoted a research project by Ned Davis (Ned Davis Research) in which he identified seven dimensions one could use to compare the March 9 low with secular lows of the past. The research showed that only one of the seven criteria indicated a secular bull was in place, whereas three were neutral and three were bearish. Although Davis believed the nascent rally had more upside potential, he concluded, like Richard Russell, that we were dealing with an extended rally (cyclical bull phase) within a secular bear market.

Davis has now turned his focus to what criteria would signal that one should exit the rally. His yardsticks were reported by Mark Hulbert on MarketWatch and

What’s new? Nothing much…Markets still moving up…

Oil rose $2.50 on Friday…to $69. Gold rose $18 to $953. The Dow was up 18 points. And the dollar fell to $1.42 per euro.

And governments are still doing the wrong thing…trying to increase demand. It’s not possible…for reasons we describe below…

Well, it’s August…and we’re on vacation. But just because we’re on vacation doesn’t mean the world stops turning. It just doesn’t turn quite so fast.

“Why don’t you just stop writing for a while?” our mother asked this morning. She is visiting for the summer.

“I don’t know how you write every day anyway. You must say the same thing…”

Richard Russell has given a Dow Theory bull market signal. When you get a signal, he says, you don’t argue with it; you go with it. Stock prices are going up.

We don’t doubt it. The Dow would have to clime to about 10,300 just to give

Ever since Richard Russell (Dow Theory Letters) called a “Dow Theory bull signal” last Thursday, the debate has been rekindled as to whether the US stock markets are experiencing a primary (secular) bull market or a rally within a primary bear market, i.e. a secondary or so-called cyclical bull phase.

As mentioned previously, Russell views the March 9 low as a secondary low, saying: “We are now in a cyclical bull market as opposed to a secular or primary bull market. In effect, we’re in an extended bear market rally. The true bear market bottom lies somewhere ahead.”

Irrespective of terminology, 64% of the readers of the Investment Postcards blog see the current phase as one characterized by “irrational exuberance”, as cleaned from a quick poll a few days ago.

As always, there are various signals pointing in different directions. The 200-day moving average of

As you review your investment portfolio to size up your current exposure to gold, keep one key point in mind: When it comes to profits, there’s no rush like a speculative gold rush.

And that’s just what we have at hand.

Inflationary fears are on the march the world over. And most of those worries are due to the trillions of dollars in stimulus spending the world’s central bankers have engineered. Those worries about the pressure from rising prices are destined to cause the next big asset bubble.

And the color of this particular bubble will be gold.

The irony here is that even though central bankers are the cause of this looming bubble in gold prices, a higher gold price isn’t their objective.

They apparently believe that freshly minted “fiat dollars” - trillions of them - are just what’s needed.

Let me explain.

The plan, you see, is quite ingenious - on its face,