Thursday, March 28, 2013

Dow Theory Update for March 28: Higher high made by the Industrials not confirmed



 Is a secondary reaction developing?


Stocks

The SPY, Industrials, and Transports closed up. The Industrials made a higher high unconfirmed by other indices. The longer the non confirmation persists, the higher the odds of a change of the secondary trend (secondary reaction). The primary and secondary trend remains bullish.

Today’s volume was higher than yesterday’s, which makes it a bullish volume day. However, the overall pattern on volume is bearish.

Gold and silver

GLD, for a fourth day in a row, didn’t either win or lose inventory yesterday.

GLD and SLV closed down. The primary and secondary trend of the market remains bearish.

GDX and SIL closed down. The primary and secondary trend of the market remains bearish.

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

 

Data for March 28, 2013





DOW THEORY PRIMARY TREND MONITOR SPY




SPY
Bull market started
11/15/2012 135.7
Bull market signaled
01/02/2013 146.06
Last close
03/28/2013 156.67
Current stop level: Bear mkt low

135.7




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




7.26% 15.45% 7.63%




DOW THEORY PRIMARY TREND MONITOR GOLD (GLD)



GLD
Bull market started
05/16/2012 149.46
Bull market signaled
08/22/2012 160.54
Exit December 20
12/20/2012 161.16
Current stop level: Sec React low 11/02/2012 162.6




Realized Loss % Tot advance since start bull mkt





0.39% 7.83%





DOW THEORY PRIMARY TREND MONITOR SILVER (SLV)



SLV
Bull market started
06/28/2012 25.63
Bull market signaled
08/22/2012 28.92
Exit December 20
12/20/2012 29
Current stop level: Sec React low 11/02/2012 29.95




Realized gain % Tot advance since start bull mkt





0.28% 13.15%





DOW THEORY PRIMARY TREND MONITOR ETF SIL



SIL
Bull market started
07/24/2012 17.08
Bull market signaled
09/04/2012 21.83
Exit January 23
01/24/2013 21.69
Current stop level: Sec React low 11/15/2012 21.87




Realized Loss % Tot advance since start bull mkt Max Pot Loss %




-0.64% 26.99% 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
Exit January 23
01/24/2013 44.56
Current stop level: Sec React low 12/05/2012 45.35




Realized Loss % Tot advance since start bull mkt Max Pot Loss %




-6.72% 12.64% 20.75%


Sincerely,

The Dow Theorist

Wednesday, March 27, 2013

Dow Theory Update for March 27: Precious metals seems to awake



Stocks meandering


Zero Hedge highlights bearish volume

In a post entitled “Autopsy of a Death Market”, Zero Hedge made clear today that volume in the last few days has been ominously bearish.

 We have taken a similar stand in this Dow Theory blog.

Stocks

The SPY closed unchanged. The Transports closed up, but failed to make higher highs (thus remaining the higher high made yesterday by the Industrials unconfirmed), and the Industrials closed down. This kind of market action, coupled with bearish volume readings (more on this below) tells us that technically this primary swing is losing steam.

Yesterday’s stock market action reminded me what happened on October 5, 2012 when the Industrials made a higher high and the other indices refused to confirm. Such unconfirmed high was the “high-water mark" mark” and from such point, a secondary reaction began. Are we seeing a repeat of the October 5, 2012 action? The odds for a secondary reaction are high because:

1.    The pattern of volume has been bearish for more than one month as shown here and here.

2.  The primary bull swing has been uncorrected for more than 4 months (since the 11/15/2012 lows). If past experience is to serve us as a guide, the primary swing is “old."

However, I insist that I am not interested in “timing” secondary reactions, as I recently explained here. I monitor, though, secondary reactions or their likely inception, because I feel that the more I understand markets, the better. Knowledge is never useless, even though I may personally decide not to trade secondary reactions.

Today’s volume was neutral. The SPY closed unchanged and volume was almost identical with the one we saw yesterday. 

Gold and silver

GLD, once again, didn’t either win or lose inventory yesterday.

GLD and SLV closed up. While it seems that a bottom has been made, if we apply Dow Theory patterns to GLD and SLV, it is too early to declare a change in trends. Not even the secondary trend has turned bullish as silver has barely budged from its February 28 lows at 27.54. I have to see silver rally by at least 5% to become convinced that the secondary trend has turned bullish. Hence, the primary and secondary trend remains bearish.

As to the gold and silver miners ETF (GDX and SIL) both closed up. The primary and secondary trend remains bearish, though.

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

 

Data for March 27, 2013





DOW THEORY PRIMARY TREND MONITOR SPY




SPY
Bull market started
11/15/2012 135.7
Bull market signaled
01/02/2013 146.06
Last close
03/27/2013 156.19
Current stop level: Bear mkt low

135.7




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




6.94% 15.10% 7.63%




DOW THEORY PRIMARY TREND MONITOR GOLD (GLD)



GLD
Bull market started
05/16/2012 149.46
Bull market signaled
08/22/2012 160.54
Exit December 20
12/20/2012 161.16
Current stop level: Sec React low 11/02/2012 162.6




Realized Loss % Tot advance since start bull mkt





0.39% 7.83%





DOW THEORY PRIMARY TREND MONITOR SILVER (SLV)



SLV
Bull market started
06/28/2012 25.63
Bull market signaled
08/22/2012 28.92
Exit December 20
12/20/2012 29
Current stop level: Sec React low 11/02/2012 29.95




Realized gain % Tot advance since start bull mkt





0.28% 13.15%





DOW THEORY PRIMARY TREND MONITOR ETF SIL



SIL
Bull market started
07/24/2012 17.08
Bull market signaled
09/04/2012 21.83
Exit January 23
01/24/2013 21.69
Current stop level: Sec React low 11/15/2012 21.87




Realized Loss % Tot advance since start bull mkt Max Pot Loss %




-0.64% 26.99% 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
Exit January 23
01/24/2013 44.56
Current stop level: Sec React low 12/05/2012 45.35




Realized Loss % Tot advance since start bull mkt Max Pot Loss %




-6.72% 12.64% 20.75%


Sincerely,

The Dow Theorist.

Tuesday, March 26, 2013

Dow Theory Update for March 26: Industrials make higher highs unconfirmed




Precious metals: The moment of truth is near


Let’s get started with our Dow Theory commentary for today in this blog.

Will a correction be averted?

The “Big Picture” blog contains an interesting article that shows that too many writers (yours truly included) expect a secondary reaction and, thus, this shows that the selling has already occurred. Here you have the link.

My take on the article is neutral. As I have written several times (i.e. here and here), we don’t trade secondary reactions but avail ourselves of them in order to set our stops. Thus, I really don’t care. If a secondary reaction develops and the primary bull market reasserts itself afterwards, we will have higher trailing stops, which is a good thing for Dow Theory investors in order to lock in profits. The exact timing of the secondary reaction is irrelevant to those investing along the primary trend.

 Go to this post in this Dow Theory blog, and you will see the way we “use” and “abuse” corrections in order to set our stops.


Stocks

The SPY, Industrials and Transports closed up. Only the Industrials have managed to make higher highs. Such unconfirmed higher high implies that a secondary reaction may be forming. The primary and secondary trend remains bullish.

Today’s volume contracted dramatically. Higher prices were not met by expanding volume, which results in a bearish volume day. Bearish volume days are piling up, which suggest that distribution is taking place. Look at the chart and you will see the predominance of red arrows (bearish volume days). 

Volume is clearly bearish and suggest that this primary bull market leg is running out of steam

 Gold and silver

GLD, once again, didn’t either win or lose inventory yesterday.

GLD and SLV closed down. The primary and secondary trend remains bearish.

GDX closed down, and SIL closed up. The primary and secondary trend remains bearish.

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

 

Data for March 26, 2013





DOW THEORY PRIMARY TREND MONITOR SPY



SPY
Bull market started
11/15/2012 135.7
Bull market signaled
01/02/2013 146.06
Last close
03/26/2013 156.19
Current stop level: Bear mkt low

135.7




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




6.94% 15.10% 7.63%




DOW THEORY PRIMARY TREND MONITOR GOLD (GLD)



GLD
Bull market started
05/16/2012 149.46
Bull market signaled
08/22/2012 160.54
Exit December 20
12/20/2012 161.16
Current stop level: Sec React low 11/02/2012 162.6




Realized Loss % Tot advance since start bull mkt





0.39% 7.83%





DOW THEORY PRIMARY TREND MONITOR SILVER (SLV)



SLV
Bull market started
06/28/2012 25.63
Bull market signaled
08/22/2012 28.92
Exit December 20
12/20/2012 29
Current stop level: Sec React low 11/02/2012 29.95




Realized gain % Tot advance since start bull mkt





0.28% 13.15%





DOW THEORY PRIMARY TREND MONITOR ETF SIL



SIL
Bull market started
07/24/2012 17.08
Bull market signaled
09/04/2012 21.83
Exit January 23
01/24/2013 21.69
Current stop level: Sec React low 11/15/2012 21.87




Realized Loss % Tot advance since start bull mkt Max Pot Loss %




-0.64% 26.99% 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
Exit January 23
01/24/2013 44.56
Current stop level: Sec React low 12/05/2012 45.35




Realized Loss % Tot advance since start bull mkt Max Pot Loss %




-6.72% 12.64% 20.75%


Sincerely,

The Dow Theorist