Dow Theory Update for November 19: Stocks close down on lower volume

Richard Russell takes a breather

At the tender age of almost 90 years, it seems that Richard Russell of the “Dow Theory Letters” is starting to take things easier after having been involved with the markets for almost 60 years. The bulk of the “Dow Theory Letters” is now written by two associates, Jon Strebler and Matt Kerkhoff. While they provide us with valuable insights, I miss the good old times (quite distant to be true, as even Mr. Russell was not strictly sticking to the Dow Theory of late) when true to its name the “Dow Theory Letters” were mainly focused on the Dow Theory. Now this time is past. In any instance I wish Mr. Russell and associates all the best.

US stocks

The SPY, Industrials and Transports closed down. The Industrials closed up yesterday and made a higher closing high unconfirmed. The higher the non confirmation persists, the higher the odds for a new secondary reaction. Let’s wait and see.

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

The primary trend was reconfirmed as bullish on October 17^th and November 13th, for the reasons given here and here.

Today’s volume was lower than Monday’s. This is bullish, as lower prices were not met by stronger volume. I consider volume to be bearish for the reasons given here and here. However, if current volume actions continues, I could soon label volume as neutral.

Gold and Silver

SLV closed down and GLD closed up. SLV made today a lower low unconfirmed by GLD. Some days ago there was another lower low not confirmed by GLD. If the non confirmation persists for some days, in might be indicative of the current pullback being temporarily arrested for the reasons given here.

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 closed down and GDX closed up. SIL violated five days ago 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.

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 represent the only markets with suggested open long positions.

 

Data for November 19, 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		11/19/2013	179.03
Current stop level: Secondary reaction low			165.48
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
6.02%	13.99%	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		11/19/2013	11.98
Current stop level: Primary bear mkt low		06/26/2013	10.59
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
-22.01%	13.13%	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		11/19/2013	23.69
Current stop level: Primary bear mkt low		06/26/2013	22.22
Unrealized gain %	Tot advance since start bull mkt	Max Pot Loss %
-17.46%	6.62%	29.16%

Sincerely,

The Dow Theorist