Tuesday, December 31, 2013

Dow Theory Update for December 31: Stocks close up making confirmed higher highs


Precious metals finish the year close to lowest lows

Let’s get started with our last Dow Theory commentary for 2013.

US stocks

The SPY, Industrials and the Transports closed up and made confirmed higher closing highs. As a faithful trend follower, I can only say that the primary bull market continues unabated. Maybe it will change soon, but, until then, the trend is your friend. 

We close 2013 with realized profits of 8.91% for the SPY (position opened on January 2nd and closed on June 21st) and unrealized profits of 9.37% (position opened on July 18th, currently open as the primary bull market remains in force). More about performance in the post that I hope to publish on January 2nd which will be a Dow Theory review for 2013. Readers of this blog stay tuned.

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.

Gold and Silver

SLV down and GLD closed up. Both precious metals finish the year close to their last recorded lows. 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.

Yesterday, I promised a review of 2013 according to the Dow Theory. It is taking more time than I expected and, since I want to do a good job and provide you with valuable information, it is going to be postponed for, hopefully, the next post on January 2nd. We will revisit all the Dow Theory-based market calls and how we have fared compared to buy and hold. It’ll be a real tour de force, as you will have before your eyes one full year of market action.

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


Data for December 31, 2013


Bull market started
06/24/2013 157.06
Bull market signaled
07/18/2013 168.87
Last close
12/31/2013 184.69
Current stop level: Secondary reaction low


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

9.37% 17.59% 2.05%

Happy new year to you all.

The Dow Theorist

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