Dow Theory Update for July 9: Stocks close to breaking the last recorded highs

 Possible change of trends for stocks at hand

Gold GOFO rates turn negative

Zero Hedge reports that GOFO rates have just turned negative.

As the article explains, it is difficult to isolate “in real time” what caused this dislocation. However, irrespective of the specific cause, a negative GOFO indicates that something is wrong with the gold market. Likely causes, according to Zero Hedge, are:

• An ETF-induced repricing of paper and physical gold
• Ongoing deliverable concerns and/or shortages involving one (JPM) or more Comex gold members.
• Liquidations in the paper gold market
• A shortage of physical gold for a non-bullion bank market participant
• A major fund unwinding a futures pair trade involving at least one gold leasing leg
• An ongoing bullion bank failure with or without an associated allocated gold bank "run"
• All of the above

Stocks

The SPY, Industrials, and Transports closed up.

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

The secondary trend has just turned bullish. More about this change of trend tomorrow. However, since we are just interested on the primary trend in order to make commitments on the long side, we shouldn’t get too excited with this change of the secondary trend.

However, as you can see on the chart below, prices are steadily nearing the last recorded highs (actually, the last primary bull market highs). Such highs are shown with a horizontal blue line (the date of those closing highs is: 05/28 for the Industrials, 05/17 for the Transports, and 05/21 for the SPY). If these closing highs are jointly broken, a new primary bull market will be signaled.

 

Keep an eye on the blue horizontal lines: If broken up, a new primary bull market would be signaled

So, I’ll keep a close eye on the three indices I monitor.

Today’s volume was lower than yesterday's, which is bearish as volume didn’t support higher prices. The overall pattern of volume is slightly bearish.

Gold and Silver

SLV, and GLD closed up. 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 up. 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 9, 2013
DOW THEORY PRIMARY TREND MONITOR SPY
			SPY
Bull market started		11/15/2012	135.7
Bull market signaled		01/02/2013	146.06
Exit June 21		06/21/2013	159.07
Current stop level: Sec reaction lows			161.27
Realized gain %	Tot advance since start bull mkt	Max Pot Loss %
8.91%	17.22%	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