Monday, November 25, 2013

Dow Theory Update for November 25: Stocks and precious metals take a breather

Trader Dan shares bearish outlook for gold

Dan Norcini has recently made a conclusive technical analysis of gold. While he is not applying the Dow Theory to gold and silver, I find his analysis flawless, and from a different perspective, confirms the bearishness of the precious metals sectors. Here you can read his November 22 post “Gold Squeaks Out only a Meager Bounce”.

US stocks

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

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

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

Today’s volume was higher than Friday’s. This is bearish, as lower prices were t met by stronger volume. I’d label volume as neutral for the reasons given here.

Gold and Silver

SLV, and GLD closed up. 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.

As to the gold and silver miners ETFs, SIL and GDX closed down. The primary trend is bearish, as was profusely explained here and here. Likewise, the secondary trend is bearish.

All in all, the last shoe to drop for the precious metals sector would be GLD and SLV reconfirming the ongoing primary bear market. Until this happens, the secondary trend is bullish, and this is the only “bullishness” to be found in this beleaguered sector.

Here you have the figures for the SPY which represents the only market with a suggested open long position:


Data for November 25, 2013


Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
11/25/2013 180.63
Current stop level: Secondary reaction low


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

6.96% 15.01% 2.05%

The Dow Theorist

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