Downside momentum subsides
Let’s begin our Dow Theory commentary for today.
US stocks
The Transports, the
Industrials and the SPY closed mildly down. Volume, for the first time in the
last few days, was bullish as today’s volume was lower than yesterday’s.
Today’s bullish volume notwithstanding, the overall pattern of volume remains
bearish. However, if tomorrow or the day after tomorrow we saw an “up” day with
strong volume, the volume picture would change. Here you have an updated chart:
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Prices closed down without conviction and volume retreated: One green shot |
The primary trend was
reconfirmed as bullish on October 17th and November 13th, for the
reasons given here and here.
Gold and Silver
SLV closed up, and GLD closed up.
For the reasons I explained here, and more recently here, 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.
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 up 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 February 5, 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 | 02/05/2014 | 175.14 | |
Current stop level: Secondary reaction low | 165.48 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
3.71% | 11.51% | 2.05% |
Sincerely,
The Dow Theorist
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