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May 18 (Bloomberg) -- Investors should sell U.S. stocks because the market is at risk of a "major crash,"
'Major Crash' Likely If Stocks Break May 7 Lows, Russell Says
Richard Russell, editor of the Dow Theory Letters newsletter, said in a note to subscribers today.
The decline would follow should the Dow Jones Industrial Average and Dow Jones Industrial Average fall below their May 7 levels, he said. They have risen 1.3 percent and 2.8 percent versus their closing levels that day.
"If I read the stock market correctly, it's telling me that there is a surprise ahead," Russell wrote. "And that surprise will be a reversal to the downside for the economy, plus a collection of other troubles ahead."
The market started showing signs of deterioration in early April, including a shrinking number of stocks reaching 52-week highs and falling stocks outnumbering rising ones, he said. Russell, 85, has published Dow Theory Letters every three weeks since 1958 and posts daily market commentaries on his website.
With the exception of gold companies, Russell advised readers to "get out of stocks now, and I don't give a damn whether you have paper losses or paper profits."
Investment guru Richard Russell has a message for those who are willing to listen.
It is looking very bearish for stocks and bonds with a few notable exceptions.
As we have suggested for a long time on this blog, the places to be in this environment are;
A few proven Gold Stocks
As a reminder, consider that the Dow Jones is only 200 points above its May 7 level of 10,380. We also note that will relatively low stock volumes in this rally, and the May 6 scare that dropped the Dow below 10,000, there does seem to be a lot of "air" beneath the market, so a major correction would not be a surprise.