Dow Theory Update for September 19: Stocks take a breather

 Trend unchanged

Is a new secular bull market born?

This is what Dave Moenning thinks, albeit he cautions that in “real time” it is very difficult to tell whether the secular tide has turned bullish. Dave has penned on “Seeking Alpha” and article that is worth reading.

He is an old timer and shrewd enough not to be dismissed out of hand. 

Furthermore, Schannep, of "thedowtheory.com", whom you know I greatly respect, wrote somes month ago that he believed that the secular trend of the market had turned bullish.

I am not going to argue with two experts that are my seniors and have a good track record. However, and in spite of the difficulty in determining value (which is supposed to be the main driver of secular markets), I remain kind of skeptical as I don’t see the obvious good values that characterize the onset a secular bull market.

US Stocks

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

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

The secondary trend is also bullish for the reasons explained here.

Today’s volume was lower than yesterday’s, which is bullish, since lower prices were not joined by volume. The overall pattern of volume remains neutral, even though yesterday we had a bullish pivot, as explained here.

Gold and Silver

SLV and GLD closed mildly down. 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.

Here, I explained that GLD and SLV set up for a primary bull market signal. However, a setup is not the same as the “real thing," namely the primary bull market; thus, many “setups” do not materialize and until the secondary reaction closing highs are jointly broken up, no primary bull market will be signaled.

SIL and GDX 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 bearish, which is tantamount to saying that there is an ongoing secondary reaction against the primary bullish trend, for the reasons given here.

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		09/19/2013	172.76
Current stop level: Secondary reaction low			163.33
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
2.30%	10.00%	3.39%

 

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		09/19/2013	14.77
Current stop level: Primary bear mkt low		06/26/2013	10.59
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
-3.84%	39.47%	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		09/19/2013	27.36
Current stop level: Primary bear mkt low		06/26/2013	22.22
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
-4.67%	23.13%	29.16%

Sincerely,

The Dow Theorist