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Richard's Wisdom

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Richard's Thoughts on Dow-Theory Non-Confirmations

Richard’s Comments

 

December 22, 2004 -- Yesterday was a most unusual day in the history of the stock market. Why unusual? Well, we don't often see all three D-J Averages making new highs for the move simultaneously. But yesterday was also unusual in that we now have a primary non-confirmation in the D-J Averages.

 

Why, what happened? Yesterday the D-J Transportation Average closed at a new record high. The D-J Industrials Average, which is up only 2.9% this year, did rise above its February 11 peak of 10737,70, which is an achievement in itself. However, the Dow did not confirm the new record high in the Transports, and as such we saw what I call a primary non-confirmation.

 

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Richard’s Thoughts on Bonds and Rising Rates

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It's hard to do well in the markets when interest rates are rising. The reason, as every old-timer knows, is that interest rates (via bonds, notes, bills) are always competing with stocks.

 

When you buy a Treasury bill or a note or bond, you’re facing only one risk – loss of purchasing power. But you can be sure of one thing, you're going to get your money back. Sure, you may be paying more for a loaf of bread ten years from now when your 10-year note matures. Worried? Then stay closer to home – buy a five year note or a two-year note. Still worried? Then stick with 91-day Treasury bills.

 

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Richard’s Thoughts on Market Corrections

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The most difficult and puzzling study of the stock market is that which deals with secondary reactions against the primary trend. Over the weekend I pulled out my volume of Robert Rhea's "The Dow Theory." I went over some of Rhea's comments on secondary reactions in a bull market.

 

I owe whatever success I've garnered from the writings of the great Robert Rhea. He was my silent mentor as was the brilliant George Schaefer.

 

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Richard’s Thoughts on Intrinsic Money

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March 17, 2010

 

The great bull market in gold has been in force for almost a decade.  I've shown where gold, since 2000, has closed higher for nine consecutive years.  During that time gold has advanced from prices in the 200s to its current price of approximately 1124.

 

Now suppose the stock market had done the same thing.  Can you imagine the frenzy that would be greeting stocks today?  Yet, incredibly, the fantastic bull market in gold has elicited little or no excitement from the US public.

 

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Richard’s Thoughts on Whether Dow Theory is Outmoded

Richard’s Comments

 

What's this? A site which calls itself "Financial Sense University" offers a "Requiem for the Dow Theory" by John Tyler and another "expose" entitled just "Dow Theory" by Sol Palha. Both articles present the thesis that the Dow Theory is outmoded and that modern changes have rendered the Theory useless.

 

I've been dealing with these sensational disclosures ever since I started writing Dow Theory Letters almost half a century ago.

 

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