Wednesday, July 31, 2013

Dow Theory Update for July 31: Stocks and precious metals meandering




Trends unchanged


Let’s analyze the markets under the prism of the Dow Theory. It is summer time, and, accordingly, this commentary will be short in the following days unless something really relevant is spotted on the charts. Any energy and free time left will be devoted to continuing the saga "Face off: Schannep versus "classical" Dow Theory", whose first part can be found here.

Stocks

The SPY and Transports closed up. The Industrials closed down.

The primary and secondary trend is bullish, as explained here, and more in-depth here.

Today’s volume was higher than yesterday, which is bullish as higher prices were joined by expanding volume. The overall pattern of volume is turning neutral.

Gold and Silver

SLV closed up and GLD closed down. The primary trend is bearish, as explained here and reconfirmed bearish here. The secondary trend is bullish (secondary reaction against the primary bearish trend), as explained here.

GDX and SIL, the gold and silver miners ETFs closed down

The primary trend is bearish, as explained here and reconfirmed bearish here.

The secondary trend for GDX and SIL is bullish, as explained here.

Here you have the figures for the SPY, which represents the only market with a suggested open long position.

 

Data for July 31, 2013






DOW THEORY PRIMARY TREND MONITOR SPY




SPY
Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
07/31/2013 168.71
Current stop level: Bear mkt low

157.06




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




-0.09% 7.42% 7.52%


Sincerely,

The Dow Theorist

Tuesday, July 30, 2013

Dow Theory Update for July 30: Indecisive day for stocks




 Precious metals close down


Let’s get started with our Dow Theory commentary on this blog for today.

Stocks

The SPY closed unchanged and the Industrials closed down. The Transports closed up.

Here you have an updated chart reflecting the latest action of the three indices we monitor:

Primary and secondary trend remains bullish


The primary and secondary trend is bullish, as explained here, and more in-depth here.

Today’s volume was higher than yesterday’s. However, as price action was so indecisive, I don’t ascribe any particular meaning to today’s action. The overall pattern of volume is bearish.

Gold and Silver

SLV and GLD closed down. The primary trend is bearish, as explained here and reconfirmed bearish here. The secondary trend is bullish (secondary reaction against the primary bearish trend), as explained here.

GDX and SIL, the gold and silver miners ETFs closed down

The primary trend is bearish, as explained here and reconfirmed bearish here.

The secondary trend for GDX and SIL is bullish, as explained here.

Here you have the figures for the SPY, which represents the only market with a suggested open long position.

Data for July 30, 2013






DOW THEORY PRIMARY TREND MONITOR SPY




SPY
Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
07/30/2013 168.59
Current stop level: Bear mkt low

157.06




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




-0.17% 7.34% 7.52%




Sincerely,

The Dow Theorist

Monday, July 29, 2013

Dow Theory Update for July 29: Stocks and precious metals close down



 Trends remain unchanged.


Stocks

The SPY, Industrials and Transports closed down.

The primary and secondary trend is bullish, as explained here, and more in-depth here.

Today’s volume was lower than Friday’s, which is bullish as lower prices were not confirmed by expanding volume. The overall pattern of volume is bearish.

Gold and Silver

SLV and GLD closed down. The primary trend is bearish, as explained here and reconfirmed bearish here. The secondary trend is bullish (secondary reaction against the primary bearish trend), as explained here.

GDX and SIL, the gold and silver miners ETFs closed down

The primary trend is bearish, as explained here and reconfirmed bearish here.

The secondary trend for GDX and SIL is bullish, as explained here.

Here you have the figures for the SPY, which represents the only market with a suggested open long position.

 

Data for July 29, 2013






DOW THEORY PRIMARY TREND MONITOR SPY




SPY
Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
07/29/2013 168.59
Current stop level: Bear mkt low

157.06




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




-0.17% 7.34% 7.52%



Sincerely,

The Dow Theorist

Friday, July 26, 2013

Dow Theory Update for July 26: Stocks close modestly up



 Agreements and disagreements with Richard Russell


Richard Russell, of the Dow Theory Letters, has turned cautiously bullish on stocks.

I agree with Russell as to the existence of a bull market, more exactly, a primary bull market.

Now begins my disagreement.

True to a bull market condition, he advises his readership to be invested in the DIA (Dow Industrials ETF). However, he insists to put a stoploss at 154, which is an extremely narrow stop, since the DIA closed last Thursday 25th at 155.12. In other words, Russell suggests placing a stop 0.72% percent below recent price action. I am writing these lines before the open of Friday 26th, so it is very likely that any minor decline will result in the trade being stopped out. By the way, the basic tenet of the Dow Theory (of any flavor whatsoever), namely, the principle of “confirmation” seems to be ignored by Russell. Furthermore, Russell seems to forget that another basic tenet of the Dow Theory is to disregard movements not reaching 3%, as they are simply noise.

Therefore, I disagree as to the suggested stoploss, which has no basis under the Dow Theory, be it the “classical” or the “Schannep” one.

Orthodox Dow Theory of any flavor whatsoever makes clear that our exit point should be either be the last recorded primary bear market lows or the last recorded secondary reaction lows, which ever is higher. Under proper Dow Theory, there is no place for whimsical stops, which more often than not end up being run. Proper Dow Theory stops strike a wonderful balance between containing losses, and giving the trade enough lee-room not to be stopped out by noise or stop running. More about the Dow Theory trailing stop here.


As I wrote here:

“[o]ne can put an arbitrary and narrower stop (i.e. 8% below current prices); however, such a stop is technically defective, and wouldn’t benefit from the extraordinary resilience of the Dow Theory record. This wouldn’t be Dow Theory”.

Stocks

The SPY, Industrials and Transports closed up.

The primary and secondary trend is bullish, as explained here, and more in-depth here.

Today’s volume was markedly lower than yesterdays, which is bearish as higher prices were not confirmed by expanding volume. The overall pattern of volume is bearish.

Gold and Silver

SLV closed down, and GLD closed up. The primary trend is bearish, as explained here and reconfirmed bearish here. The secondary trend is bullish (secondary reaction against the primary bearish trend), as explained here.

GDX and SIL, the gold and silver miners ETFs closed up.

The primary trend is bearish, as explained here and reconfirmed bearish here.

The secondary trend for GDX and SIL is bullish, as explained here.

Here you have the figures for the SPY, which represents the only market with a suggested open long position.


Data for July 26, 2013






DOW THEORY PRIMARY TREND MONITOR SPY




SPY
Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
07/26/2013 169.11
Current stop level: Bear mkt low

157.06




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




0.14% 7.67% 7.52%



Sincerely,

The Dow Theorist