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 Richard Russel
News: Betting odds on Bush continue to drop. Tradesport at 54% for Bush, Iowa Electronic shows Bush at 49.8% and Kerry at 50.0% - the first time Kerry is in the lead.
The U.S. trade deficit in August widened to $54 billion, the second largest deficit on record.
Mortgage applications dropped 9.2% last week. Refinancing applications fell 14.2%, the first drop since last August. Loan requests for buying a home slide 4.9%, the lowest level since late-June.
Meanwhile, home building stocks continue their slide, a slide that began in late-September...
Does the Dow Theory still work? You be the judge. I warned week after week that the divergence and series of non-confirmations on the part of the D-J Industrial Average constituted a red flag for investors. I stated that it was an indication that important distribution was taking place. I warned that we were seeing the most extended and the most flagrant period of divergency and non-confirmations in Wall Street history. For some strange reason nobody else seemed to be impressed. Once again, I was alone.
Over the same period, I received e-mails telling me that the Transports were antiques, that the confirmation principle was no longer valid, that the Dow Theory was a relic, that the Dow stocks were not representative of the U.S. economy - you name it, I received it. I was even sent articles from various market experts who explained why the Transports were actually the "leading average," and if the Transports continue higher, why that was bullish.
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