Monday, November 12, 2012

Dow Theory Update for Nov 12: Gold and silver setting up for primary bear market signal



No technical changes until now
 

After our rather dense “Dow Theory Special Issue” of last Saturday, let’s get started with something lighter for today.

The SPY and Transports closed up. The Industrials closed down by a mere -0.23 point.

Since the SPY and the Transports closed up, I’d say that basically it was an “up” day. However, volume was dramatically low, which has a bearish connotation.

Technically, nothing has changed. The primary trend remains bullish and the secondary trend remains bearish. However, if you have not done so yet, I encourage you to read my post “Is the primary trend for stocks about to change? which you can read here

If you read that post, you will see that the the primary trend for stocks may turn bearish very soon.

Gold and silver closed down today. I find noteworthy that gold and silver are setting up for a primary bear market signal. On 10/04/2012, gold and silver jointly made new highs. Since that date, they retraced the primary bull market advance until 11/02/2012. From that date, both GLD and SLV staged a rally off the 11/02/2012 secondary reaction lows. Such rally clearly exceeded 3% for GLD and almost reached 6% for silver. You know that for stocks the rally following the secondary reaction lows must reach at least 3% in order to be meaningful. You also know that for gold and silver I adjust such 3% threshold to their own volatility. Gold has roughly the same volatility of the SPY and, hence, if no adjustment is made. Silver almost doubles gold volatility, so I demand ca. 6%.

From their 11/02/2012 lows at 162.60 gold rallied until 11/08/2012 when it reached 167.99. This is a rally of 3.3%. Silver didn’t quite reach 6% but as you can find here, I only demand one rally. Furthermore, silver almost confirmed since its rally amounted to 5.3%.
 
Therefore, if the secondary reaction lows of 11/02/2012 are broken a primary bear signal under Dow Theory will be flashed for gold and silver. Here you have an updated chart. The red line shows the price level to be jointly violated to have a primary bear market signal. 

Gold and silver setting up for a primary bear market signal


 The precious metals ETF miners GDX and SIL closed down. However, there is no technical change to report.

So we have plenty of work to do in the coming days. We have to keep a close eye on the Transports, GLD and SLV.

Here you have the figures of the markets I monitor for today

 

Data for November 12, 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
11/12/2012 138.26
Current stop level: Bear mkt low

128.1




Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %




1.59% 7.93% 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
11/12/2012 167.45
Current stop level: Bear mkt low

149.46




Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %




4.30% 12.04% 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
11/12/2012 31.37
Current stop level: Bear mkt low

25.63




Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %




8.47% 22.40% 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
11/12/2012 23.94
Current stop level: Bear mkt low

17.08




Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %




9.67% 40.16% 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
11/12/2012 50.04
Current stop level: Bear mkt low

39.56




Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %




4.75% 26.49% 20.75%


Sincerely,

The Dow Theorist

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