Dow Theory Update for Nov 10: Stocks on thin ice.

Primary trend for stocks might change to bearish very soon.

Nov 10 was one of these days that are relevant under Dow Theory.

The Industrials and the SPY closed mildly up. The Transports closed clearly down displaying for the first time in the last few weeks less strength than its peers. 

Volume was lower than yesterday's, which has a bearish connotation since it was an up day for the SPY and the Industrials. So the short term pattern of volume remains mixed with a slightly bearish bias.

If we study volume action at short term pivots, we derive a clearer bearish picture. The last pivot low was bearish (since its volume was higher than the volume at the preceding pivot low). The latest pivot high was also bearish since its volume was lower than at the preceding pivot high. While such bearish implication is quite short term (let’s say 2-3 weeks) it clearly isn’t a bullish sign. But, again, I’d like to stress that volume qualifies trends, doesn’t make them.

Here you have an updated volume chart. As you can see the blue (volume bullish) and red (volume bearish) arrows are quite evenly distributed. On pivot days the second arrow denotes whether volume was bullish or bearish at the pivot point. 

Volume bearish at the last two pivots

 

So why was it a relevant day for stocks under Dow Theory? Because the Transports by closing down are approaching the “danger zone”; namely the breaking point where a primary bear market is signaled under Dow Theory.

Later today or at the latest before the open on Monday, I will post a special Dow Theory issue commenting the Dow Theory set up that may lead soon to a primary bear market signal. This post is going to be well thought-out and its taking time to make it.

Gold closed mildly down. Silver up and their respective ETF miners closed down. Technically, under Dow Theory, nothing changed. The primary trend continues bullish.

Here you have the figures of the markets I monitor for Nov 10:

 

Data for November 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		11/09/2012	138.16
Current stop level: Bear mkt low			128.1
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
1.51%	7.85%	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		11/09/2012	167.82
Current stop level: Bear mkt low			149.46
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
4.53%	12.28%	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		11/09/2012	31.54
Current stop level: Bear mkt low			25.63
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
9.06%	23.06%	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		11/09/2012	24.12
Current stop level: Bear mkt low			17.08
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
10.49%	41.22%	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		11/09/2012	50.67
Current stop level: Bear mkt low			39.56
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
6.07%	28.08%	20.75%

Sincerely,

The Dow Theorist