Volume doesn't confirm stock's rally
US stocks
The SPY, Industrials and
Transports closed up.
The secondary trend is bearish
(secondary reaction against the primary bull market) for the reasons explained here.
Last Friday
October 11th, the stock market set up for a primary bear market
signal, for the reasons given here.
Please mind that a “set up” does not mean the actual signal. So, it is
perfectly possible that the October 8th secondary reaction lows
never get jointly violated and, accordingly, no primary bear market is
signaled. We now merely have the “set up” for a primary bear market signal;
whether it will materialize into an actual signal, depends on subsequent price
action.
Today’s
volume was lower than Fridays, which is bearish, as higher prices were not met
by expanding volume. We have had three consecutive bearish volume days (as
shown on the chart below). Furthermore, the pattern of volume during the
ongoing rally is bearish as each subsequent higher price has attracted less and
less volume (see the declining trendline on the volume chart). Therefore, today
I change my stand on volume and label it as bearish, which means that now the
odds favor lower prices (or at least stalling prices) in the days ahead.
Nonetheless, please take volume readings with a grain of salt. Volume merely
qualifies the odds for a given trend to continue, but price action trumps all
other considerations.
Volume clearly contradicts recent price action: Prices up, volume down |
Gold and Silver
SLV closed down, and GLD
closed up. 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 up. SIL and
GDX, unlike GLD and SLV, are 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 | 10/14/2013 | 170.94 | |
Current stop level: Secondary reaction low | 165.48 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
1.23% | 8.84% | 2.05% |
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 | 10/14/2013 | 12.23 | |
Current stop level: Primary bear mkt low | 06/26/2013 | 10.59 | |
Unrealized gain % | Tot advance since start bull mkt | Max Pot Loss % | |
-20.38% | 15.49% | 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 | 10/14/2013 | 23.11 | |
Current stop level: Primary bear mkt low | 06/26/2013 | 22.22 | |
Unrealized gain % | Tot advance since start bull mkt | Max Pot Loss % | |
-19.48% | 4.01% | 29.16% |
Sincerely,
The Dow
Theorist
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