Dow Theory Update for April 15: Markets meltdown

 Later today special issue on gold

Zero Hedge sees a correction coming

Zero Hedge has noted that, of late, credit markets seems to be a good predictor of stock market activity. In other words, when credit markets swoon, stocks tend to follow suit.

Recent action (declines and shares redeemed) in JNK ETF seems to suggest that stocks are going to face headwind soon. As followers of this Dow Theory blog are well aware, volume has been bearish for weeks now, so a secondary reaction wouldn’t come as a surprise. However, I give priority to price action itself and, until now, the trend has not changed, even after today’s rout.

Stocks

The SPY, Industrials and Transports closed down. In spite of today’s action, which seems to herald lower prices ahead, it is still too early to declare the existence of a secondary reaction according to the Dow Theory. We should not forget that two trading days ago both the SPY and Industrials we making higher highs. So it is too early to declare the secondary trend as bearish. Therefore, both the primary and secondary trend remains bullish.

Today’s volume was substantially higher than Friday’s, which makes it a bearish volume day. While the last pivot high was bullish (although volume was not impressive), the overall picture of volume continues bearish and has worsened today. Today’s action resulted in a pivot low. As you can see in the chart below today’s low was on higher volume than the preceding low (connected to today’s low through the pink horizontal line). Therefore, today’s pivot was bearish as volume was stronger than the volume recorded at the preceding low. 

Bearish volume patterns outweight bullish ones

 

Gold and silver

GLD continues its bleeding. It seems that demand for allocated gold has something to do with GLD’s “pukes”.

GLD and SLV closed down in free fall mode. As you can guess, both the primary and secondary trend remains bearish.

Later today, I will post a special issue on gold.

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

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

Data for April 15, 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		04/15/2013	155.12
Current stop level: Bear mkt low			135.7
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
6.20%	14.31%	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.