Thursday, November 21, 2013

Dow Theory Update: SIL and GDX extend losses following primary bear market signal




Industrials make higher high unconfirmed



US stocks


The SPY, Industrials and Transports closed up. The Industrials made a higher closing high unconfirmed.


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 Wednesday’s. This is bullish, as higher prices were met by stronger volume. After today’s action, I’d tentatively label volume as neutral. I base this opinion on two factors:

1)     There have been 5 bullish volume days in a row.
2)    Volume contracted during the last muted pullback, which is bullish
3) However, lots of volume bearishness can be found in the days preceding the last 5 days.

Here you have an updated chart:

I'd say volume is neutral short term

 
Gold and Silver


SLV closed up, and GLD closed down. Yesterday, GLD and SLV made lower lows, which is bearish (even though it doesn’t change our verdict as to the secondary trend)


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, both closed down. The primary trend was signaled as bearish yesterday, 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 21, 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
11/21/2013 179.91
Current stop level: Secondary reaction low
165.48




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




6.54% 14.55% 2.05%




Sincerely,

The Dow Theorist

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