Tuesday, July 23, 2013

Dow Theory Update for July 23: Stocks take a breather

 And precious metals come to life (within the secondary bullish trend)

Excellent article on active versus passive investing

The “Systematic Relative Strength” (Dorsey Wright) has published an enlightening article concerning factor investing (being “factor” different investment styles like momentum, value, volatility). The article makes two important claims:

1.   Factor investing (i.e. constructing a portfolio using different investment styles, each one with its own proven outperformance) manages to increase absolute performance, while, at the same time, reducing risk (volatility).

2.    What passes as “passive” investment (i.e. index investing), is not as “passive” as many may think. They make the bold, and right, claim that “index investing is active investment” (emphasis in original).

You can read the article “Factor Investing” here.


The SPY and Transports closed down. The Industrials made a higher high, unconfirmed.

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

Today’s volume was higher than yesterday’s, which is bearish as lower prices were attracted stronger volume. I’d label the overall pattern of volume as neutral.

Gold and Silver

SLV 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, and bettered the last secondary reaction closing highs.

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 23, 2013


Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
07/23/2013 169.14
Current stop level: Bear mkt low


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

0.16% 7.69% 7.52%


The Dow Theorist

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