Dow Theory Update for November 12: SIL and GDX draw even closer to a primary bear market signal

Strebler, of the Dow Theory Letters, nails it down with gold

Strebler, one of Mr. Russell’s recent associates at the “Dow Theory Letters," has recently written that the chart of gold, in spite of all wishful thinking, does not show a rosy picture for the metals. He shows that there are strong levels of resistance at ca. 1550, and to make things worse, a moving average “cross of death” has recently occurred. So, he doesn't see a bottoming formation.

This is why this blog, albeit with different tools, has persistently insisted that the primary trend of the market for gold remains bearish, in spite of the “green shoots” (i.e. a secondary reaction against the primary bearish trend) seen by others. Of course, one of these secondary reactions will end up being the first leg of a new primary bull market, but one of the tenets of the Dow Theory is to give the benefit of doubt to the existent trend, and this trend for gold remains bearish.

US stocks

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

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

The primary trend was reconfirmed as bullish on October 17th, for the reasons given here.

Today’s volume was much stronger than Monday’s. This is bearish, as lower prices were met by stronger volume. I consider volume to be bearish for the reasons given here and here. Furthermore, the trend line of volume of the last few days is ominously bearish, as volume has steadily contracted as prices advanced and has expanded as prices declined.

Gold and Silver

SLV and GLD closed down. SIL made a lower low unconfirmed by GLD. If the non confirmation persist for some days, in might be indicative of the current pullback being temporarily arrested. Let’s wait and see.

For the reasons I explained here, and more recently 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 violated the last recorded secondary reaction closing lows. GDX, however, refused to confirm. Accordingly, SIL and GDX are still flirting with a primary bear market signal, and after today’s action, they draw even closer to that fateful moment, as was explained here and here.

Here you have an updated chart displaying SIL lower lows and GDX non confirmation:

GDX refused to confirm SIL's lower lows: Primary bear market not signaled (yet?)

 

SIL and GDX, unlike GLD and SLV, are in a primary bull market under the Dow Theory, as explained here and here, even though, this could change very soon.

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.

 

Data for November 12, 2013
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		11/12/2013	176.96
Current stop level: Secondary reaction low			165.48
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
4.79%	12.67%	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		11/12/2013	11.85
Current stop level: Primary bear mkt low		06/26/2013	10.59
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
-22.85%	11.90%	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		11/12/2013	23.78
Current stop level: Primary bear mkt low		06/26/2013	22.22
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
-17.14%	7.02%	29.16%

Sincerely,

The Dow Theorist