Dow Theory update for Oct 9: All markets down. No change in trend

Industrials and SPY still caught within the line.

What's the current condition of the stock market?

 

On October 3, this Dow Theory blog alerted about the formation of a “line" which is relevant under Dow Theory. Please re-read my post in this blog “Stock markets forming a „line': What does it mean under Dow Theory?" which you can find here to be more acquainted with its implications for investors.

Well, after five trading days, I can only say the “line” continues in good health. The Industrials briefly broke through the line on 10/05/2012. Such movement, though, was not confirmed by either the Transports or the SPY and hence, being unconfirmed, we could not derive any bullish implication. Furthermore, since such breakout continues unconfirmed after three trading days, it can be an indication of an impending secondary reaction.

Here you have an updated chart displaying the “line” (blue rectangles in the Industrials -on top- and the SPY -at the bottom-):

The Industrials and the SPY forming a line.

As you can read in the chart, the Industrials have been caught in a 1.47% trading range and the SPY in a 2.76% one. So we are witnessing a very tight formation. Big accumulation or distribution is taking place. However, as you can see from the meager percentages, we are far from being in a “bear” market, or even a secondary reaction. 

This spreadsheet may help you visualize the main figures and dates of this "line":

 

	Date	SPY	Date	INDUSTRIALS
High point	09/14/2012	147.24	10/05/2012	13610.15
Low point	09/26/2012	143.29	09/26/2012	13413.51
% from high to low		2.76%		1.47%

Today was a bearish volume day. Stocks were clearly down on higher volume.

As to gold, silver and their miners all of them closed down. However, no technical damage has been made and we cannot even boast a minor secondary reaction.

The BLV/GLD ratio (long term bond/gold) ratio still at a difficult juncture refuses to break down.

So another day to focus on the big picture: The primary bull movement remains in force until contradicted by a new bear market signal. Until now we are very far from such a signal since we haven’t even seen a secondary reaction.

Here you have the figures for today:

 

Data for October 9, 2012
DOW THEORY PRIMARY TREND MONITOR SPY
			SPY
Bull market started		06/04/2012	128.1
Bull market signaled		06/29/2012	136.1
Last close		10/09/2012	144.2
Current stop level: Bear mkt low			128.1
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
5.95%	12.57%	6.25%
DOW THEORY PRIMARY TREND MONITOR GOLD (GLD)
			GLD
Bull market started		05/16/2012	149.46
Bull market signaled		08/22/2012	160.54
Last close		10/09/2012	170.99
Current stop level: Bear mkt low			149.46
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
6.51%	14.41%	7.41%
DOW THEORY PRIMARY TREND MONITOR SILVER (SLV)
			SLV
Bull market started		06/28/2012	25.63
Bull market signaled		08/22/2012	28.92
Last close		10/09/2012	32.83
Current stop level: Bear mkt low			25.63
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
13.52%	28.09%	12.84%
DOW THEORY PRIMARY TREND MONITOR ETF SIL
			SIL
Bull market started		07/24/2012	17.08
Bull market signaled		09/04/2012	21.83
Last close		10/09/2012	24.45
Current stop level: Bear mkt low			17.08
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
12.00%	43.15%	27.81%
DOW THEORY PRIMARY TREND MONITOR ETF GDX
			GDX
Bull market started		05/16/2012	39.56
Bull market signaled		09/04/2012	47.77
Last close		10/09/2012	52.08
Current stop level: Bear mkt low			39.56
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
9.02%	31.65%	20.75%

Sincerely,

The Dow Theorist.