Dow Theory Update for December 4: Precious metals take a breather

 Stocks weak on bearish volume

Let’s get started with our daily commentary on this Dow Theory blog.

US stocks

The Industrials, Transports and 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 17^th and November 13th, for the reasons given here and here.

Today’s volume was higher than yesterday’s. This is bearish, as lower prices were met by stronger volume. I’d label volume as bearish.

Gold and Silver

SLV and GLD closed strongly 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. 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 up. 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 December 4, 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		12/04/2013	179.73
Current stop level: Secondary reaction low			165.48
Unrlzd gain %	Tot advance since start bull mkt	Max Pot Loss %
6.43%	14.43%	2.05%

Sincerely,

The Dow Theorist