Dow Theory Update for December 12: GLD and SLV back to the “danger zone”

Weakness persist in stocks

US stocks

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

Days of lower prices begin to pile up. If the decline persisted and got deeper, soon a secondary reaction would be signaled.

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 yesterday’s. This is bullish, as lower prices were not confirmed by stronger volume. I’d label the overall pattern of volume as bearish.

Gold and Silver

SLV and GLD closed strongly down. 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. However, such set up will be nullified if GLD and SLV jointly violate the last recorded primary bear market lows, as I explained here.

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.

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

Data for December 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		12/12/2013	178.13
Current stop level: Secondary reaction low			165.48
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
5.48%	13.42%	2.05%

Sincerely,

The Dow Theorist