Dow Theory Update for April 1: Silver makes lower lows unconfirmed by gold

Stocks weak

“Least loved bull market in modern history."

The systematic relative strength blog quoting USA Today reminds us that the current bull market is the least loved bull market in modern history. Here you have the details. If we take a contrarian view, this implies that it is still far from topping.

From a Dow Theory perspective, we know that the “buy signal” was given on January 2, 2013 (Schannep’s version) or January 18, 2013 (Classic/Rhea version). We also know that primary bull markets tend to last ca. 1-2 years according to Dow Theory signals. Thus, if the empirical record is to serve us as a guide, the current primary bull market is still “young” and, hence, while nothing is carved in stone, the odds favor the continuance of the primary bull market. However, we should distinguish between a primary bull market and a secondary reaction within a primary bull market. Thus, while it is probable that a secondary reaction may be developing, the youth of the current primary bull market advocates for continuance of the primary bull market.

Stocks

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

Today’s volume was higher than Thursday’s (last trading day), which makes it a bullish volume day. While the overall patter of volume is bearish, the last two days have witnessed bullish volume.

Gold and silver

Silver made a lower low unconfirmed by GLD which closed up. Lower lows unconfirmed tend to be deceptive. Thus, for the primary bear market in SLV and GLD to be reconfirmed, it is necessary that GLD makes lower lows. Here you have an updated chart of SLV and GLD. 

New low in silver unconfirmed by gold

 

Please mind that the SLV/GLD ratio (purple line) shows that gold is stronger than silver. Normally, healthy bull markets in the precious metals entail strength in silver, which, until now, is clearly absent. So silver is acting like a drag on gold.

According to the Dow Theory, we have to stick to the existing trends until a new signal makes us change our mind. Thus, the primary and secondary trend for SLV and GLD 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 1, 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		04/01/2013	156.05
Current stop level: Bear mkt low			135.7
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
6.84%	15.00%	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.