Richard Russell Turns Bullish, Suggests Buying The DIAMONDS ETF (DIA)

Richard Russell, who recently suggested that the Dow will test the 6,547 level, is now singing a new tune. Fresh off his statement that, “I envision the Dow dropping to test, and possibly violate, the 6,547 level. I don’t know whether this will take place this year, but I wouldn’t be shocked if it does. It would not surprise me if the Dow tests the 6,547 level. And if that happens, I can almost guarantee the US will have sunk into the much-feared “double-dip” recession.” Richard has come out with an endorsement (for younger investors) to buy a quantity of the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA). This as both the Industrial and Transport Averages broke out to close decisively and simultaneously above their June highs this past Monday. See his comments below:

July 27, 2010 — The world has been turned upside down. I guess that’s what you might think if you read yesterday’s site. But no, it’s the same old world. The difference is that on Wall Street we received a Dow Theory bull signal yesterday. This occurred when both the Industrial and Transport Averages broke out to close decisively and simultaneously above their June highs.

I’ll admit it — I really didn’t expect it. But the stock market doesn’t arrange itself to live up to Richard Russell’s expectations. The stock market is a law unto its self. The stock market owes me or anyone else nothing. The FACT is that the situation has changed. In breaking out above their June highs, the Averages are saying that the market trend has reversed from down to up. Argue with that at your own risk.

I explained what I personally intend to do about yesterday’s action. But each investor’s position is different. In view of my financial position and my age, I don’t feel any urge to play the upside of this market, this despite the Dow Theory bullish signal. That fact is that at this stage of my life, risk vs.reward plays a very large part in my actions.

However, this does not apply to the great majority of my subscribers. If you are bold and willing to speculate and take risks, I outlined a plan you might follow. It’s simple — buy a quantity of DIAs that you feel comfortable with, place a mental stop loss under your purchase price (maybe 8% under) and get in on the fun.

Not all Dow Theorists agree with Richard, both Jack Schannep and Richard Moroney interpret the Dow Theory as still being on a sell signal. Buyer beware, but an interesting turn of events none the less.

The SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the Dow Jones Industrial Average (DJIA).

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