Dow Theory Update for May 29: Yesterday’s higher high by the Industrials remains unconfirmed

 Trends remain unchanged

The secular bear market is not finished yet

Danielle Park of the “Juggling Dynamite” blog, echoing Vitaliy Katsenelson, is of the opinion that the secular bear market in stocks that began in the year 2000 is far from over. PER and profit margins (and record highs) speak against a new secular bull market. As a consequence, we should brace ourselves for, at least, one more cyclical bear market.

From a Dow Theory perspective or, at least, from a Rhea/Classical Dow Theory perspective, it is immaterial to us whether we are in a secular bull or bear market, as we are mainly interested in the cyclical bull and bear markets. Thus, on November24, 2012, I wrote:

I personally tend to ignore the secular trend and, like Schannep, I feel comfortable spotting cyclical bull and bear markets. This implies a time frame of ca. 1-2 years, which is long term enough not to be a short term trader but short term enough not to be a “buy and hope," sorry, “buy and hold” investor. The secular trend is important, though: It helps me determine the total amount of capital to be committed to stocks. In a secular bull market like the nineties, I'd feel comfortable with an 80% allocation to stocks. Under a secular bear market, I'd decrease my commitment even under a cyclical bull market.

Furthermore, my Dow Theory studies show that the investor is able to extract profits (albeit more modestly) from the market even under secular bear markets, as explained here.

Stocks

The SPY, Industrials and Transports closed down. The higher high made by the Industrials yesterday remains unconfirmed.

Today’s volume was slightly higher than yesterday’s. Accordingly, it has a bearish connotation as declining prices were confirmed by stronger volume. The overall pattern of volume is neutral, since, in spite of some bullish volume days, volume action was clearly bearish on 05/22/2013. Here you have an updated chart.

Volume is neutral.

 

Gold and Silver

GLD and SLV closed up. However, one “up” day is not enough to change trends. The primary and secondary trend remains bearish.

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 May 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		05/29/2013	165.27
Current stop level: Bear mkt low			135.7
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
13.15%	21.79%	7.63%
Alternative Schannep's stoploss:
Highest closing high		05/21/2013	167.17
16% stoploss from highest closing high			140.42
		Max Pot Loss %
		-3.86%
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