Dow Theory Update for August 28: Gold refuses to flash primary bull market signal

Stocks continue trapped in secondary reaction

Stocks

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

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

The secondary is bearish, which implies an ongoing secondary reaction against the primary bullish trend, as explained here.

Today’s volume was lower than yesterday’s. Since stocks closed up, contracting volume has a bearish connotation, as higher prices were not confirmed by volume. I’d label current volume readings as neutral.

Gold and Silver

SLV, and GLD closed down. Well, it seems that, for the time being, we don’t get a primary bull market in gold and silver. Yesterday, I noted that SLV had broken up the secondary reaction high that preceded the last recorded bear market swing. However, gold refused to confirm, and by so doing, the Dow Theory dictum was clear: No primary bull market had been signaled, as one of the basic tenets of the Dow Theory is that the movement of one index must be confirmed by the other one. I also wrote that the longer the non-confirmation persists, the higher the odds for a new pullback.

 

For the reasons I explained here, I feel the primary trend remains bearish. Here I analyzed the primary bear market signal given on December 20, 2012. The primary trend was reconfirmed bearish, as explained here. The secondary trend is bullish (secondary reaction against the primary bearish trend), as explained here.

GDX and SIL closed down. SIL and GDX, unlike GLD and SLV, are unambiguously in a primary bull market under the Dow Theory, as explained here and here. The secondary trend is bullish as well.

Here you have the figures for the SPY, GDX and SIL which represents the only markets with suggested open long positions.

 

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		08/28/2013	163.91
Current stop level: Bear mkt low			157.06
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
-2.94%	4.36%	7.52%

  

DOW THEORY PRIMARY TREND MONITOR ETF SIL
			SIL
Bull market started		06/26/2013	10.59
Bull market signaled		08/14/2013	15.36
Last close		08/28/2013	15.4
Current stop level: Primary bear mkt low		06/26/2013	10.59
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
0.26%	45.42%	45.04%
DOW THEORY PRIMARY TREND MONITOR ETF GDX
			GDX
Bull market started		06/26/2013	22.22
Bull market signaled		08/14/2013	28.7
Last close		08/28/2013	28.3
Current stop level: Primary bear mkt low		06/26/2013	22.22
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
-1.39%	27.36%	29.16%

Sincerely,

The Dow Theorist