Dow Theory Update for Dec 24: Another bearish day for stocks

 Long-term bonds fell out of bed.

Being on the eve of Christmas, I’ll endeavor to keep this post in this Dow Theory blog short.

Stocks closed down today. Once again, the breakout made by the Transports on Dec 18 remains unconfirmed. The longer the non-confirmation persists, the higher the odds that the primary bear market signal signaled in November was “the real thing” and  not just a failed signal. 

Furthermore, last Friday’s monster volume is a harbinger of extreme moves to come (either the pullback has exhausted itself, and a powerful rally ensues or such pullback is going to gain momentum). Today’s volume was tiny and hence it has a bullish implication. However, we have to compare apples to apples. Friday’s monster volume prevails in my mind.

More about the importance of such non-confirmation and Friday’s volume on last Friday’s post which you can find here.

Gold (GLD) closed mildly up. Silver (SLV) closed mildly down. The primary and secondary trend remains bearish.

BLV (long-term bonds term bonds ETF) fell out of bed today with a massive gap down. It is good to remember that on December 19, I warned that an important trend line had been violated by BLV. However, and in spite of the drastic decline, the BLV/GLD ratio remains bullish, which means that lower bonds (higher interest rates) while being bearish on their own, doesn’t automatically translate into strength for gold. For gold to really shine, bonds have to turn bearish, and the ratio must turn bearish too (stronger gold). In a future, but not to be too delayed, post I will express more in depth my current thoughts on bonds, the ratio, and how it can affect stocks and gold (basically the ratio is telling us two different scenarios, one bullish for stocks, the other one bullish for gold).

SIL closed mildly up (just a cent). GDX closed down. The primary trend remains bullish and the secondary trend bearish.

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

 

Data for December 24, 2012
DOW THEORY PRIMARY TREND MONITOR SPY
			SPY
Bear market started		09/14/2012	147,24
Bear market signaled		11/16/2012	136,37
Last close		12/24/2012	142,35
Current stop level: Bull market high			147,24
Price chg since bear mkt signaled	Tot decline since start bear mkt	Max Pot Loss %
4,39%	-3,32%	-7,38%
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		12/24/2012	160,62
Current stop level: Sec React low		11/02/2012	162,6
Realized Loss %	Tot advance since start bull mkt
0,05%	7,47%
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		12/24/2012	28,94
Current stop level: Sec React low		11/02/2012	29,95
Realized gain %	Tot advance since start bull mkt
0,07%	12,91%
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		12/24/2012	22,25
Current stop level: Bear mkt low			17,08
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
1,92%	30,27%	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		12/24/2012	44,85
Current stop level: Bear mkt low			39,56
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
-6,11%	13,37%	20,75%

I wish you all a merry Christmas.

Sincerely,

The Dow Theorist