Dow Theory Update for April 24: Precious metals finally display some strength

 Indecisive action in stocks

 

Let’s see what the Dow Theory has in store for us today.

Stocks

Yesterday I was wondering whether under Dow Theory, we can declare the existence of a secondary reaction.

After carefully studying the charts of the SPY, Industrials and Transports, I conclude that under strict Dow Theory, we cannot detect the existence of a secondary reaction yet.

Thus, according to Schannep, we need at least two indices declining a minimum of 10 days with at least 8 trading days of declining prices for the average of all 3 indices. If we look at the chart of the SPY and Industrials we can see that we haven’t reached this count yet. The Industrials have been declining for 8 days and the SPY has declined for 9 days. Only the Transports have been declining for more than 10 trading days. So we still have to wait. Both the SPY and the Transports have experienced peak to trough declines exceeding 3% which set them up for a secondary reaction, once the time requirement is fulfilled.

The SPY and Transports closed up. The Industrials closed down. For the reasons explained above both the primary and secondary trend remains bullish.

Today’s volume was higher than yesterday’s. Since most indices closed up, it seems that volume was mildly bullish.

Gold and silver

GLD lost inventory….Again! I consider Fofoa’s latest post a must read in order to comprehend the fate of paper gold. You can find it here. If Fofoa is right, then we should brace ourselves for the following surprises:

·        The EUR is not as doomed as many are keen to say.

·        The USD is doomed (and maybe will collapse in hyperinflation throes).

·        Physical gold will eventually decouple from “paper” gold.

In the meantime, GLD and SLV closed up. The primary and secondary trend remains bearish.

The gold and silver miners ETFs, GDX 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 April 23, 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		04/23/2013	157.88
Current stop level: Bear mkt low			135.7
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
8.09%	16.34%	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