More on the primary bear market anniversary in gold and silver
Last Tuesday
24th, I wrote about the first anniversary of the primary bear market
signal in gold and silver. Today, I’d like to add a couple of random thoughts
on this issue.
It is good to
remember that many experts had been trying unsuccessfully to call a bottom and declare the bear market as extinguished.
Even legendary Russell (of the Dow Theory Letters fame), based on point and figure charts was confident on August
15, 2013 (when it looked like gold and silver were getting out of the doldrums)
a bottom had been made (as you can read here). Armed with the Dow Theory rules
I resisted all siren songs and stuck to my verdict: the primary bear market was
not over and the rebound was merely a secondary reaction within the primary bear market. Now, more than 4 months later, after Russell’s call, subsequent price
action has shown that the primary bear market was in good health.
Of course,
things can change: when/if the secondary reaction highs made by SLV and GLD get
broken out, then a primary bull market will be signaled. Nevertheless, until
this happens, I stick to my guns and declare the primary bear market as still
existing. The market action we see in GLD and SLV confirms one of the tenets of
the Dow Theory, namely, that primary bull and bear markets tend to last several
months and even years. We are not dealing with “swing trading” or minor trends,
but with a long term one. Of course, in some instances, we will see short-lived
primary trends, but, on average, primary trends last longer than many expect. Hence, fight them at your own peril.
US stocks
The
Industrials, Transports and SPY closed up; all of them bettered, once again, the
last recorded closing highs, which means that the primary bull market remains
in good health.
The primary
trend was reconfirmed as bullish on October 17th and November 13th,
for the reasons given here and 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.
As to the
gold and silver miners ETFs, SIL, and GDX closed up. 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 26, 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 | 12/26/2013 | 183.85 | |
Current stop level: Secondary reaction low | 165.48 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
8.87% | 17.06% | 2.05% |
Sincerely,
The Dow
Theorist
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