Wednesday, November 13, 2013

Dow Theory Update for November 13: Primary bull market for stocks reconfirmed

Stocks “in the clear”

US stocks

The SPY, Industrials and Transports closed up and bettered the last recorded primary bull market closing highs. This confirms the current primary bull market, and, accordingly, stocks are “in the clear”. Here you have an updated chart:

It is a primary bull market climbing a wall of worry

Thus, our “counter” for a secondary reaction is set to zero today. Any future secondary reaction is to be “counted” from today’s (or subsequent) higher ground.

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 and today.

Today’s volume was much stronger than Tuesday’s. This is bullish as higher 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 closed down, and GLD closed up. SIL made for a consecutive day a lower low unconfirmed by GLD. The longer the non confirmation persist for some days, the higher the odds for the current pullback to be temporarily arrested. Let’s wait and see. Here you have a chart showing the recent non-confirmation:

SLV and GDX at a critical juncture

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 up. SIL violated yesterday 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 as was explained here and here.

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.



Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
11/13/2013 178.38
Current stop level: Secondary reaction low


Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %

5.63% 13.57% 2.05%


Bull market started
06/26/2013 10.59
Bull market signaled
08/14/2013 15.36
Last close
11/13/2013 11.92
Current stop level: Primary bear mkt low
06/26/2013 10.59

Unrealized gain % Tot advance since start bull mkt Max Pot Loss %

-22.40% 12.56% 45.04%


Bull market started
06/26/2013 22.22
Bull market signaled
08/14/2013 28.7
Last close
11/13/2013 23.91
Current stop level: Primary bear mkt low
06/26/2013 22.22

Unrealized gain % Tot advance since start bull mkt Max Pot Loss %

-16.69% 7.61% 29.16%


The Dow Theorist

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