Richard Russell: Unemployment to rise to 25%

... Richard Russell, had this to say in his latest commentary: “Lowry's is one of the technical studies that I depend on in my appraisals of the stock market. Turning then to Lowry's figures, what we see here is critically important. In early August, the Buying Power Index (demand) broke below the Selling Pressure Index (supply).”

Richard Russell continues:

“Even more important, Buying Power since last February has been in a sideways movement -- but in late-July Buying Power suddenly broke down and embarked on a long down-sloping trend. At the same time, Selling Pressure was gliding down gently but it suddenly turned up in late July. What we see now is the two indices spreading apart which is extremely bearish -- Selling pressure is steadily increasing while Buying Power is dropping like a stone.

This clear and steady deterioration in the market's internals is being masked or hidden by a parade of good news regarding the US economy and by a persistent and deceptive rise in the Dow. At some point in the near future, the weakening internals of the market will cause the Dow to buckle and the bear market will burst into view again.

The aftermath of debt bubbles, when they burst, is measured, not in years, but in decades. I've said before that my signal for the end of this extended top will be that time when the Dow breaks below 10,000. Once, having violated 10,000, I expect consumers to turn dead-bearish, and I expect the currently optimistic analysts to become pessimistic.
...

Click to expand...

ancona said:

He's spot on about buying power. I have noticed many items we regularly consume slowly rising in price, or coming in the same sized container with less and less product. Breakfast cereal comes immediately to mind. When shopping at the grocery a couple of weeks ago, I spent some time looking around at all the packaging and product weights, and was astounded at the trickery and subtle changes. I noticed the bottles of liquid soap no longer had a small taper, but now sported an hourglass feature with the label screaming out "New and improved ergonomic dispenser" but it had 12 ounces now, instead of 16.

Click to expand...