Tuesday, April 30, 2013

Dow Theory Update for April 30: SPY makes new unconfirmed higher highs



 Gold stronger than silver


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

Alternative explanation to GLD “pukes."

Here and here you can find two views on GLD inventory drain. According to them, nothing nasty is about to happen to GLD or paper gold. Since Bron Suchecki, who works at the Perth Mint, is a real “insider” and not just a phony “expert” I wouldn’t discard his thoughts out of hand.

In any instance, my take is as follows. Physical gold is to be in one’s possession or the closest thing to it (i.e. fully allocated gold in bullion ). I see it as a long term insurance with the potential for a windfall profit, and such core physical gold holding is not to be traded, not even under the Dow Theory. However, when it comes to “paper gold” it is a fully tradable item whose trading can benefit from the Dow Theory.

Stocks

The SPY, Industrials and Transports closed up. The SPY made a higher high, which, once again, remains unconfirmed by the other indices. Such a lack of confirmation shouldn’t last too long if the primary trend is to dodge, once again, a secondary reaction.

Today’s volume was higher than yesterday, which is bullish as higher prices were supported by expanding volume.

Gold and Silver

Although it is a “no-new”, GLD “puked” once again. Is demand for allocated gold forcing the bullion banks to redeem GLD in search for physical?

GLD closed up. SLV closed down. The primary trend is bearish, and the secondary trend is bullish. Yes, the secondary trend, turned bulish yesterday, as you can read here.
 
GDX and SIL the gold and silver miners ETFs, closed up. The primary and secondary trend remains bearish. However, a further “push” upwards exceeding the last minor recorded highs (04/25/2013 for SIL and GDX) would turn the secondary trend as bullish. In the meantime, we peacefully observe the markets.

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

 

Data for April 30, 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
04/30/2013 159.68
Current stop level: Bear mkt low

135.7




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




9.32% 17.67% 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

Monday, April 29, 2013

Dow Theory Update for April 29: Gold and silver setting up for a primary bull market






SPY makes unconfirmed higher highs. Secondary trend of gold and silver turns bullish


Today has been a day rich in Dow Theory events. We shall deal with them accordingly in this Dow Theory blog.

Stocks

The SPY, Industrials and Transports closed up. The SPY managed to make a higher high on a closing basis. However, such new high was not confirmed by the other two indices we monitor. The primary and secondary trend remains bullish.

Today’s volume was significantly weaker than that of Friday’s, which is bearish as higher prices were not joined by expanding volume. Today we witnessed a new pivot high (SPY). This pivot high was on lower volume than the preceding pivot high (connected by a horizontal pink line as you can see on the chart below), which has a bearish connotation. Furthermore, as you can see in the chart below, 3 of the last 4 pivots had bearish volume.


A bearish pivot high.

At the risk of repeating myself, what I see is a predominantly bearish volume picture, which is a harbinger of a secondary reaction. However, price action is more important than volume readings, and, by this token, we have to be patient.

Gold and silver

GLD puked again.

GLD and SLV closed up. Today gold and silver set themselves up for a change of trend. Let’s look at the charts under the magnifier.


 
The secondary trend for gold and silver turned bullish

Firstly, 10 trading days have elapsed since the 04/15/2013 lows. 

Secondly, GLD has won 8.36% (142.3 at today’s close versus 131.31 on 04/15/2013) and SLV has won 6.56% (23.54 at today’s close versus 22.09 on 04/15/2013). Thus, gold has staged a rally exceeding the minimum threshold of 3% for gold and ca. 6% for silver, given its larger volatility.  

Thus, a counter trend rally exceeding 3% (GLD) and 6% (SLV) has been staged by both precious metals. Thus, today we can label the secondary trend as bullish. In other words, a secondary reaction against the primary bearish trend has been signaled today according to the Dow Theory rules.

As to the primary trend, it remains bearish. However, now things get interesting. If either GLD or SLV experiences a pullback exceeding 3% (GLD) or ca. 6% (SLV) and after that pullback, new highs are made, then the primary trend will be declared as bullish.

Therefore, we have to keep a watchful eye on the GLD and SLV charts in the coming days.

As you can see, many days can pass by where the Dow Theory analyst has little to say, as trends tend to last longer than expected. Within this context, it is good to remember that the Dow Theory accurately detected the existence of a primary bear market in gold and silver on December 20, 2012, as was explained here. However, now we find ourselves in a juncture where in a short lapse of time, a change of trend of primary nature can occur.

From this point, two things may happen: Either the markets break below the 15/04/2013 lows, and the primary bear market will be reconfirmed, or the markets, after some modest pullback, break above the secondary reaction highs thereby signaling a new primary bull market.

SIL and GDX, the gold and silver miners ETFs closed up. However, it is still too early to call a change of the secondary trend. Let alone the primary trend.

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

 

Data for April 29, 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
04/29/2013 159.3
Current stop level: Bear mkt low

135.7




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




9.06% 17.39% 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.

Friday, April 26, 2013

Dow Theory Update for April 26: Stocks meandering





 GLD cannot stop puking


Doug Short reports durable goods orders plunged in March

Doug Short, a market analyst I respect, reported in Seeking Alpha that durable goods orders collapsed in March. He makes a conclusive case (supported by charts) that there is a strong correlation between durable goods orders and subsequent S&P performance. If past experience is to be proven right again, we should brace ourselves for a secondary reaction, which, hitherto, the market has stubbornly dodged.


Stocks

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

Volume contracted today, which is bullish as declining prices in the S&P and broad indices like Nasdaq were not supported by expanding volume.

Gold and silver

GLD lost inventory again. GLD’s inventory’s malaise is not unique to this ETF. There is a run on physical gold and, thus, as reported by GoldSeek.com, gold is disappearing from all depositories. Thus, over the past 4 weeks total inventories collapsed by over 5.5. million ounces. This is not small potatoes. Where is the gold going? Who is so desperately seeking physical gold? The bullion banks in order to meet allocation demands? Why such deluge of allocation requests? Has it something to do with the USD? These are questions that any inquisitive mind should pose. I am not so sure about the answers, but at least we have to be inquisitive enough to smell a rat. At the risk of repeating myself, I feel that the best answers have been given by blogger Fofoa whom you can read here.


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

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

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

 

Data for April 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
04/26/2013 158.24
Current stop level: Bear mkt low

135.7




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




8.34% 16.61% 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