Precious metals mostly up
Let’s begin with our brief Dow Theory analysis for
today in this blog.
The SPY, Industrials and Transports closed down. The
Transports continue, by far, displaying greater relative strength. However, we
have to keep an eye on the action of the Transports in the coming days. From
the 09/28/2012 lows at 4892.62, the Transports rallied until 11/06/2012 to
5203.6 for a gain of 6.35%. Since such an upward movement exceeded 3% it
qualified as a rally under Dow Theory. It would be bearish action if the
Transports violated the 09/28/2012 lows. So I will keep an eye on the action of
the Transports like a hawk. Until now, however, the Transports, unlike the
Industrials and SPY, have not broken the lowest lows hitherto made during the
secondary reaction. I am reluctant to ascribe a bearish implication to the
action of the Industrials and the SPY because their violation of their latest
recorded secondary reaction lows was not at least preceded by a rally of at
least 3% in either or both of them. Precisely, the only index that showed a
rally exceeding 3%, the Transports, is the only index that has refused to violate
its lows.
Volume was lower than yesterday’s, so it has a bullish
implication since it was a down day. The pattern of volume continues mixed.
What I find noteworthy, is that the trend of the
Gold/Dow ratio has turned bullish, which denotes stronger gold than stocks. In
spite of all gold price gains, the ratio remained bearish since many months
ago, since it kept making lower lows. As you can see in the chart below (marked
with a blue rectangle) the ratio staged a secondary reaction against the primary
bearish trend. Then a pullback followed, and the subsequent rally broke about the
preceding ratio highs (marked with a horizontal green line). Since the
Silver/Dow ratio was already in a bullish mode months ago, we can conclude
that:
1)
The
odds favor gold out performance over stocks in the coming months.
2)
Both
gold and silver should benefit from the latest bullish signal of the Gold/Dow
ratio. We shouldn’t forget that since a bull market was signaled for both
metals under Dow Theory (August 22, 2012) silver has displayed greater relative
strength.
3)
While
not in itself a bearish signal for stocks (they may go up but less than gold), the bullish ratio for gold doesn’t do any good
to stocks.
Here you have the chart:
![]() |
Gold Dow ratio turned bullish |
As to the Precious Metals universe it was a bullish
day. Gold closed clearly up and silver closed slightly down. Their respective
miners ETF closed up. Technically, nothing has changed. The primary trend for
gold and silver remains bullish, and the secondary trend remains bearish. As to
the miners ETFs the primary trend remains solidly bullish, and it remains
doubtful whether the miners are in a secondary reaction.
Here you have
the figures of the markets I monitor for today.
Data for November 8, 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 | 11/08/2012 | 138,04 | |
Current stop level: Bear mkt low | 128,1 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
1,43% | 7,76% | 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 | 11/08/2012 | 167,99 | |
Current stop level: Bear mkt low | 149,46 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
4,64% | 12,40% | 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 | 11/08/2012 | 31,38 | |
Current stop level: Bear mkt low | 25,63 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
8,51% | 22,43% | 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 | 11/08/2012 | 24,42 | |
Current stop level: Bear mkt low | 17,08 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
11,86% | 42,97% | 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 | 11/08/2012 | 51,41 | |
Current stop level: Bear mkt low | 39,56 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
7,62% | 29,95% | 20,75% |
Sincerely,
The Dow Theorist
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