Dow Theory Update for May 7: Stocks make once again higher highs

 Precious metals meandering

Stocks are “in the clear”

I am happy that in the last few days, there have been several events that are technically relevant. In the absence of such days, writing a daily commentary becomes an exacting job, as days go by without anything noteworthy to be said (unless, one is willing to clutter the blog with all kinds of irrelevant stuff that bear no relationship with investing). However, this is the price we have to pay when investing along the primary trend: Most of the days are technically irrelevant. Nevertheless, one never knows when the relevant event will hit, and, hence, the diligent investor should monitor the markets daily. Of course, nobody said that investing along the primary trend should be exciting or big fun. Those looking for excitement will be certainly disappointed by the Dow Theory or, at least, by Dow Theorists that simply stick to their trade (pun intended). However, those interested in protecting capital and even see it grow, are well advised to honor the time-tested  Dow Theory, as my studies prove beyond any shade of doubt, as you can read here.

Thus, as I explained here, the primary trend of the stock market has been confirmed as bullish. This is a relevant event.

Another important event has just occurred. On May 6, 2013 (yesterday), the Transports made new all-time highs thereby joining the SPY and the Industrials. Thus, all three indices are “in the clear," which, certainly, is a bullish accomplishment.

Therefore, even though I brace myself for a secondary correction, technically the market is telling us unambiguously that the trend is up and, for the time being, the bulls are holding the upper hand. While I am aware that investors are leveraged to the hilt, and, accordingly, such leverage can spell trouble for stocks any momento now, I’d never argue against a primary bull market. As Keynes said, markets can stay irrational longer than one can stay solvent.

Stocks

The SPY, Industrials and Transports closed up. It goes without saying that the primary and secondary trend is bullish.

Today’s volume was higher than yesterday’s, which makes it a bullish volume day.

Gold and silver

GLD and SLV closed down. Until now, the pullback has not reached the minimum levels of 3% (GLD) and ca. 6% (SLV) so that the set up for a primary bull market signal is completed. Thus, until negated by market action, we just have a bullish secondary trend (correction) and the primary trend which remains bearish.

As to the gold and silver miners, ETF (GDX and SIL) both closed down. The primary trend and secondary trend remain bearish.

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

Data for May 7, 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		05/07/2013	162.6
Current stop level: Bear mkt low			135.7
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
11.32%	19.82%	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