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