Precious metals remain in nowhere’s land
Ritholtz’
blog “The Big Picture” contains valid observations concerning 90% up days.
Ritholtz’
blog “The Big Picture” posted recently an interesting post name “90% Up days
are bullish” concerning 90% “up” days and subsequent price action. The study
shows that 90% up days (which are defined by Ritholtz as 90% of NYSE shares
closing up and 90% of volume corresponding
to advancing issues) are bullish and generate significant follow-through.
Go to the BigPicture post and acquaint yourself with the stats shown.
I derive,
accordingly, two conclusions:
1) Ultra
bullish volume is bullish long term.
2) However,
ultra bullish volume is bearish short term and price action following the
next five days, clearly shows some
temporarily exhaustion. This is why a frequently say that too bullish volume
tends to beget a short-lived bearish counter movement. The same applies to too
bearish volume (i.e. volume spikes with declining prices) which tends to be
followed by a rebound of modest proportions, in spite of being bearish medium
term.This is what makes trading based on volume elusive.
US stocks
The SPY,
Industrials and Transports closed up.
The primary
trend was reconfirmed as bullish on October 17th, for the reasons given here.
Today’s
volume was higher than yesterday’s, which is bullish, as higher prices were met
by expanding volume. I consider volume to be bearish for the reasons given here. Furthermore, as you can see on the chart below,
yesterday we had a bearish pivot, which means that the volume seen at yesterday’s
closing high (pivot) was lower than the volume seen at the preceding pivot of
September 18th (previous closing high). Shrinking volume at pivots
tends to have bearish implications for the next few weeks (even though for the
reasons given in the beginning of today’s post, bearish volume can be bullish
in the very short term of 1-5 days).
Volume is not supportive |
Gold and
Silver
SLV closed
up, and GLD closed 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 closed up,
and GDX closed down. 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 | 10/18/2013 | 174.39 | |
Current stop level: Secondary reaction low | 165.48 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
3.27% | 11.03% | 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 | 10/18/2013 | 12.95 | |
Current stop level: Primary bear mkt low | 06/26/2013 | 10.59 | |
Unrealized gain % | Tot advance since start bull mkt | Max Pot Loss % | |
-15.69% | 22.29% | 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 | 10/18/2013 | 24.38 | |
Current stop level: Primary bear mkt low | 06/26/2013 | 22.22 | |
Unrealized gain % | Tot advance since start bull mkt | Max Pot Loss % | |
-15.05% | 9.72% | 29.16% |
Sincerely,
The Dow
Theorist
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