Richard Russell last evening…

June 17, 2009 -- I continue to grade the primary trend of the stock market and the economy as bearish. In order for a counter-trend rally in a bear market to be sustained, it requires steady or rising buying power plus short covering.

I just went over my figures -- Lowry's Buying Power Index has been declining steadily since May 8. At yesterday's market close, Lowry's Buying Power Index (demand) was only 24 points higher than it was at the March 9 lows. Furthermore, volume is drying up. This is extremely negative action. Whenever buying power contracts during a rally in a bear market, the prevailing primary bear market forces immediately take over. For that reason, unless the trend of declining buying power soon halts and reverses, I believe that the March 9 lows will be attacked and violated.

Consequently, I advise my subscribers to assume a highly defensive position in their portfolios. If you are still loaded with stocks, cut back and get ready for the "hard rain." What we're seeing now is just the early drizzle…

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