Dow Theory Update for July 5: Precious metals listless. Trends unchanged

Stocks closed up

Great article on the advantages of market timing

Those skeptical as to the benefits of market timing, and its ability to increase slightly profits while drastically reducing drawdowns versus buy and hold, are advised to read “Timing Method Performance Over Ten Decades", penned by Mutual Fund Observer. The article delivers a breakdown of the performance and risk reduction achieved over ten decades (that is a century) by timing the market with a modest moving average, versus buy and hold and portfolio diversification (60 % stocks, 40% bonds). As you can guess, even a simple rule like getting out of stocks when prices are below the 200 day moving average, manage to increase returns while reducing risk.

Once again, the article proves that timing devices (even modest ones, such as a 200 days moving average) do a very good job at protecting the investor from devastating losses. And, at the risk of over repeating myself, the investor should first focus on not losing too much money. Avoid big losses, and profits will take care of themselves.

If things are so good with a humble moving average, you can imagine that the Dow Theory clearly excels when it comes to reducing drawdowns and increasing performance. In a future post on this Dow Theory blog, I will compare the Dow Theory versus the 200 day moving average as timing devices.

Stocks

The SPY, Industrials, and Transports closed up.

The primary trend and secondary trend is bearish for the reasons explained here, and further explained here.

Today’s volume was higher than Wednesday's, which is bullish as volume grew in unison with higher prices. However, as you can see on the chart below, volume remains muted, and is not supporting the current rally. The overall pattern of volume is very bearish for the reasons explained here.  The updated chart below shows clearly that the trend of volume is clearly bearish: Ascending when prices decline and descending when prices rally, in spite of today's bullish volume.

The current rally in not supported by volume.

Gold and Silver

SLV, and GLD closed down. The primary trend is bearish, as explained here and reconfirmed bearish here; the secondary trend remains bearish too.

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 remains bearish too.

Eventually, one of these primary bear market re-confirmations will be proven false. In the meantime, it is better not to fight the trend, and wait for a primary bull market signal in order to make a commitment on the long side.

Here you have the figures of the markets I monitor for today, which contain no changes, as we are flat.

 

Data for July 5, 2013
DOW THEORY PRIMARY TREND MONITOR SPY
Bull market started		11/15/2012
Bull market signaled		01/02/2013
Exit June 21		06/21/2013
Current stop level: Sec reaction lows
Realized gain %	Tot advance since start bull mkt	Max Pot Loss %
8.91%	17.22%	None.
DOW THEORY PRIMARY TREND MONITOR GOLD (GLD)
Bull market started		05/16/2012
Bull market signaled		08/22/2012
Exit December 20		12/20/2012
Current stop level: Sec React low		11/02/2012
Realized Loss %	Tot advance since start bull mkt
0.39%	7.83%
DOW THEORY PRIMARY TREND MONITOR SILVER (SLV)
Bull market started		06/28/2012
Bull market signaled		08/22/2012
Exit December 20		12/20/2012
Current stop level: Sec React low		11/02/2012
Realized gain %	Tot advance since start bull mkt
0.28%	13.15%
DOW THEORY PRIMARY TREND MONITOR ETF SIL
Bull market started		07/24/2012
Bull market signaled		09/04/2012
Exit January 23		01/24/2013
Current stop level: Sec React low		11/15/2012
Realized Loss %	Tot advance since start bull mkt	Max Pot Loss %
-0.64%	26.99%	27.81%
DOW THEORY PRIMARY TREND MONITOR ETF GDX
Bull market started		05/16/2012
Bull market signaled		09/04/2012
Exit January 23		01/24/2013
Current stop level: Sec React low		12/05/2012
Realized Loss %	Tot advance since start bull mkt	Max Pot Loss %
-6.72%	12.64%	20.75%

Sincerely,
  
The Dow Theorist