Dow Theory Update for March 6: Industrials and SPY make higher highs

 Gold and silver up.

Richard Russell declaring a primary bull market in stocks?

It seems that Richard Russell, of  the "Dow Theory Letters",  has finally conceded that a primary bull market has been signaled under the strictest interpretation of the Dow Theory (new all-time highs). He closed yesterday’s Dow Theory letter by enigmatically saying, “Thus, we have a new?? A new what?”, he promised his readers to give further explanations today. I am on pins and needles.

At this point, it is good to do a small recap.

Under Schannep’s flavor of the Dow Theory, which is the “flavor” I basically use in this blog, a primary bull market was signaled on January 2. More information about such a primary bull market here and here. 

Under the “classical/Rhea” Dow Theory (which I also monitor), a primary bull market was signaled on January 18, as it was explained here. Assuming an entry at the close of such a day (SPY closed at 148.33), the unrealized profit would amount to 4.15%.

 

The unrealized gains hitherto made by the “Schanep’s” signal amounts to 5.77%, assuming an entry at the close of such a day (SPY closed at 146.06).

The unrealized gains hitherto made by the “classical/Rhea” signal amount to  4.15%, assuming an entry at the close of such a day (SPY closed at 148.33).

And the unrealized gains made by Russell's interpretation of the Dow Theory amount to a measly 0.13%, which is normal since we assume an entry at yesterday’s market close.

It is not time to light the fireworks and relish on the unrealized gains.

Firstly, be mindful that this in only “unrealized” gains. A modest secondary reaction may temporarily erase such profits. No pain, no gain. There is no way around it.  

Secondly, we should bear in mind that it seems we are still under a secular bear market, and hence all primary bull market signals are susceptible to face some headwind, as was highlighted in this post. However, for the reasons, I have stated several times in this Dow Theory blog, I think the investor should take all the signals because, if the worst comes, he risks a suboptimal profit or even a modest loss, but the risk of folding is too high because even under secular bear markets the Dow Theory managed in the pass to extract some profits from the market, while keeping drawdowns on check.

Stocks

The SPY and Industrials closed up. The Transports closed down. The primary and secondary trend remains bullish.

Today’s volume was slightly higher than yesterdays. Given that by market cap there was a slight bullish bias, I consider today’s volume as bullish. The overall pattern of volume, as explained yesterday remains bearish.

Gold and silver

GLD lost yesterday an amazing 8.42 tonnes of gold. Prices should start to go up soon or else…

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

As to the miners ETFs, GDX and SIL, both closed strongly up. However, the primary and secondary trend remains bearish.

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

 

Data for March 6, 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		03/06/2013	154.49
Current stop level: Bear mkt low			135.7
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
5.77%	13.85%	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