Dow Theory Update for August 13: GDX refuses to confirm SIL breakup

Primary bull market in gold and silver stock miners not signaled yet

 Sorry for the delay, but I had internet problems.

Stocks

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

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

Today’s volume was higher than Friday’s. Since stocks closed up, expanding volume has a bullish connotation. For the reasons I gave here, I’d say that volume has turned bullish. We have had five consecutive bullish volume days, and the last breakup of 08/01 was a bullish pivot, as was explained here.

Here you have an updated chart:

Volume seems to be bullish

However, my experience shows me that volume bullishness tends to beget a counter movement of short duration (let’s say 1-3 days). Furthermore, the Transports seem to be not in tune with the SPY and Industrials (two consecutive days of closing in the opposite direction), which is suggestive of a counter rally.

Gold and Silver

SLV closed up, and GLD closed down. SLV is well above its 07/23 closing highs, whereas GLD refused to confirm. This lack of confirmation suggests that the secondary reaction against the primary bull market may be sputtering. If we couple this certainly non bullish action with GDX not confirming SLV’s higher closing highs, we can conclude that the secondary trend in both the metals and their stocks might be in jeopardy. The longer it takes for GDX and GLD to confirm SIL and GLD, the more dangerous the situation for the whole precious metals universe.

Here you have a chart displaying the latest action of SLV and GLD

It remains a primary bear market. Maybe it will turn bullish soon

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.

SIL closed up, and GD closed down. SIL is well above the 07/23 secondary reaction closing highs. However, GDX by closing down for a second day in a row refused to confirm. If GDX broke up its 07/23 highs, a primary bull market would be signaled. Thus, the failure of GDX to confirm SLV’s higher highs prevents me from qualifying the primary trend as bullish. According to the Dow Theory such a breakup unconfirmed is more often than not deceptive. Furthermore, the longer the non-confirmation persists, the more suspect the ongoing bullish secondary trend will be.

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.

All in all, precious metals are approaching a moment of truth, either GLD and GDX better their last recorded closing highs soon, or the odds will favor lower prices in the days ahead.

Long term bonds

BLV (the long term bond ETF) made a lower low today. The looks of its chart are not good. Prices should rebound immediately and leave the technical danger zone or else….

Here you have a chart that says it all. The top of the chart is BLV, the bottom features GLD and the red thick lines shows the BLV/GLD ratio, which, technically is also in a very delicate situation.

Long Term bonds are long term bearish on the chart

 

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		08/13/2013	169.61
Current stop level: Bear mkt low			157.06
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
0.44%	7.99%	7.52%

Sincerely,

The Dow Theorist