Dow Theory Update for Mach 7: Industrials and SPY make new highs

Transports closed down for a second consecutive day

Russell didn’t declare a new primary bull market in stocks

Finally, Richard Russell spoke.

He acknowledged that we are on uncharted waters due to massive QE (which is true) and thus, while acknowledging that new all-time highs in both the Industrials and Transports should lead to the proclamation of a primary bull market (I’d add: if not previously proclaimed by other Dow Theory “flavors”), he is reluctant to follow blindly the Dow Theory without reward to current circumstances.

Russell is too old, smart and experienced to be dismissed out of hand. I can only say that nobody went broke by being too cautious. Furthermore, Russell is advising his followers to be invested in gold along the secular bull market. Thus, it is very likely that Russell’s subscribers will end up making handsome profits by merely being invested in gold. However, as far as stocks are concerned, and within one’s percentage allocation to stocks (which may be modest according to personal circumstances and assessment of the current secular market), I feel leery as to completely ignoring a primary bull market signal, which has been previously preceded by other two primary bull market signals (“classical/Rhea” and “Schannep’s” flavor). Personally, and given Schannep’s and even the “classical/Rhea” Dow Theory track record, I feel that the price to pay by being outside the markets may be too high. My studies on the Dow Theory performance even under secular bear markets show that even under such an environment is possible to make extract profits from the market.

Stocks

The SPY and Industrials closed up. The Transports closed down. The primary and secondary trend of the market is bullish.

Today’s volume was higher than yesterday’s, which makes it a bullish volume day, since advancing prices were met by expanding volume. We have had three bullish volume days in a row within a very bearish volume picture.

Gold and silver

24hgold.com reports that GLD has experienced the longest inventory drawdown since inception. Yesterday, however, the decline of inventories stopped. Will it hold? 

 

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

The gold and silver miners ETFs (GDX and SIL) closed down. The primary and secondary trend remains bearish.

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

 

Data for March 7, 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		03/07/2013	154.78
Current stop level: Bear mkt low			135.7
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
5.97%	14.06%	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