Trends unchanged.
I am having a quite congested schedule. Thus, during
this week my posts will be very short. If I see nothing noteworthy I may well
skip posting. However, I will be checking the markets daily and, should
anything remarkable (under the Dow Theory viewpoint) happen, I’d try to alert
you on this Dow Theory blog.
US Stocks
The SPY, Industrials and Trasnports and Industrials
closed up. The SPY exceeded its last recorded closing highs. However, the
Transports and the Industrials did not deign to confirm. The longer the
non-confirmation persists, the more suspect the SPY’s higher highs become.
The market remains caught in a
technically complicated juncture. If the February lows were violated a primary
bear market would be signaled. On the other hand, if the last recorded closing
highs where broken out, the primary bull market would be reconfirmed. You can
gather more information about the current juncture, here and 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 up. For the
reasons I explained here, and more recently here, and in spite of all the bullishness
than now surrounds gold and silver, the primary trend remains bearish.
For the primary trend to turn
bullish, SLV and GLD should jointly
break above the secondary (bullish) reaction highs. As a reminder, the
secondary reaction closing highs were made on August 27th, 2013
(shown with blue horizontal lines). From such highs the market declined without
jointly violating the June 27th, 2013 primary bear market lows
(shown with red horizontal lines). Once again, we see the importance of the Dow
Theory tenet of “confirmation”. GLD briefly traded below the horizontal red
line; however, since SLV did not
confirm, a reconfirmation of the primary bear market was averted. Now we are
seeing bullish action; nonetheless, such a bullish action must be put in
context or, more accurately, put in the context of the proper timeframe. Thus,
according to the Dow Theory the bullishness we are seeing merely is the
“secondary trend” (actually, the secondary bullish reaction against the primary
bear market). It is too premature to qualify the primary trend as bullish. A
primary bull market signal will be flashed when jointly SLV and GLD break above the blue horizontal line (secondary
reaction highs).
By the way, I alerted that the
secondary trend turned bullish long ago (on July 22, 2013), when most market
pundits were solidly bearish, as you can read here. Now, those very pundits are very bullish as only the sky was the limit. I
take the middle road based on the Dow Theory: Since July 22, 2013 there was
technically good reason not to be so bearish; on February 14th, 2014, there is
no reason to be long term so bullish.
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.
On a statistical basis the
primary bear market for GLD and SLV is getting old. More than one year since
the bear market signal was flashed has elapsed. However, I am extremely
skeptical as to the predictive power of statistics. I prefer price action to
guide me, and the Dow Theory tells me that the primary trend remains bearish
until reversed.
Furthermore, the June 27, 2013
lows remain untouched. The longer this situation lasts, the higher the odds
that something might be changing. But I wait for the verdict of price action.
As to the gold and silver miners ETFs, SIL closed down and GDX closed up.
The secondary trend is bullish, as explained here. In spite of short term
bullish accomplishments, SIL and GLD are not in a primary bull market.
The primary trend for SIL
and GDX remains, nonetheless, bearish, as was profusely explained here and here.
Sincerely,
The Dow Theorist.