In spite of some today’s up close, precious metals remain in the grips of the bear
Tom Vician is
a successful trend follower. His latest post in his “TrendFollowing Trader”
blog alerts us that markets are severely overbought, both technically and in
sentiment. Furthermore, he notes that the market laggards have recently
outperformed the market. As he says “the
detritus floats”, which is usually a bad omen. However, as a good trend
follower, he waits for the actual signal and, in the meantime, acknowledges
that the trend is up. Given his outstanding track record, it is worth to
observe his thoughts. Personally, I feel the current run-up (or primary bull
market leg) is due for a secondary correction, as you can see on the chart below; whether such a correction is to
become a primary bear market, we cannot say; it is much too early. What is
clear to me is that market sentiment is reaching extremes, as Zero Hedge
reports here.
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Recent SPY action: A primary bull market. The last primary bull market swing might be aging |
US stocks
The SPY,
Industrials and the Transports closed down and backed off from the most recent
highs made last Tuesday highs.
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.
Later today,
or tomorrow I will post a review of 2013 according to the Dow Theory. 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 January 2, 2014 | |||
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 | 01/02/2014 | 182.92 | |
Current stop level: Secondary reaction low | 165.48 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
8.32% | 16.47% | 2.05% |
Sincerely,
The Dow
Theorist
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