Precious metals should rally soon or else…
US stocks
The Transports, the
Industrials and the SPY closed down. Today I can affirm that a secondary
reaction has been signaled. Even though it is necessary that at least two of
the three indices, we monitor a decline by more than 3% from the latest
recorded closing highs, today we can see that all 3 indices have declined more
than 3%. Here you have the spreadsheet that says it all.:
INDU
|
TRANS
|
SPY
|
|
Highest closing high
|
16576.66
|
7569.89
|
184.69
|
Pullback low
|
15837.88
|
7199.18
|
178.01
|
Pct decline |
-0.04456748
|
-0.04897165
|
-0.03616872
|
Here you have an updated chart
so that you see it by yourself. The orange rectangles depict the ongoing
secondary reaction (which can grow larger if prices continue to decline with no
intervening +3% rally in at least one index):
![]() |
Orange rectangles highlight the ongoing secondary reaction against the primary bull market |
As you know, I have been warning
that the Transports’ strengths making higher highs unconfirmed by the other indices
was a warning sign of a developing secondary reaction. Well, today it is no
longer a suspicion but a certainty.
Now we have to pay close
attention to subsequent price action. If at least one index were to rally by
more than 3%, and the last recorded secondary reaction lows were to be
violated, then a new primary bear market would be signaled.
So today we label the secondary trend as bearish. The primary trend remains
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 and GLD closed 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.
As to the gold and silver
miners ETFs, SIL and GDX closed down. The secondary trend is bullish, as
explained here.
The primary trend for SIL
and GDX remains, nonetheless, bearish, as was profusely explained here and here.
Here you have the figures for
the SPY which represents the only market with a suggested open long position:
Data for January 27 , 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 | 01/27/2014 | 178.01 | |
Current stop level: Secondary reaction low | 165.48 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
5.41% | 13.34% | 2.05% |
Sincerely,
The Dow Theorist
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