Wednesday, June 19, 2013

Dow Theory Update for June 19: Primary bear market for gold and silver reconfirmed



 Stocks take a nosedive.


Stocks

The SPY and Industrials, and Transports closed down. The primary trend is bullish, and the secondary one is bearish for the reasons given here.

Today’s action brought the stock indices closer to the June 5 lows. If the June 5 lows were to be violated a primary bear market would be signaled, as was explained here.

Today’s volume was higher than yesterday’s, which has a bearish connotation, since lower prices were met by expanding volume. The overall pattern of volume remains neutral.

Gold and Silver

GLD violated the 05/17/2013 primary bear market lows (red horizontal line). By violating such lows, GLD confirmed SLV's lower lows of June 7, and according to the Dow Theory, the primary bear market has been reconfirmed, once again. It is good to remember that the Dow Theory signaled a primary bear market for GLD and SLV on December 20, 2012, as was punctually reported here. Thus, this primary bear market signal is already 6 months old. If I were dealing with stocks, I would say that this primary bear market is nearing middle age, as the average duration for bear markets tends to be ca 6 months. However, I am dealing here with precious metals, which is a totally different beast, and accordingly, I have no track record to guide me as to the likely duration of this bear market. What I do know, though, and this is enough to keep me out of trouble, is that the primary and secondary trend is bearish.

Here you have an updated chart:

By violating the 05/17 lows (red horizontal line) GLD confirmed SLV and the primary bear market has been reconfirmed
  
SIL violated the 05/17/2013 primary bear market lows. However, GDX, still holds above such lows, and did not confirm. Such lack of confirmation implies that the primary bear market has not been re-confirmed yet, and, more importantly, that the secondary trend remains bullish. Perhaps the secondary bullish trend is in its death-throes, but until GDX makes a lower low and confirms SIL, the secondary trend remains bullish according to the Dow Theory for the reasons explained here.

The chart below shows the precarious situation of SIL and GDX:

GDX hasn't confirmed SIL lower lows. Will it do it soon?
 
Here you have the figures of the markets I monitor for today.

 

Data for June 19, 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
06/19/2013 163.45
Current stop level: Sec reaction lows

161.27




Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %




11.91% 20.45%        None.








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

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