Precious metals should move either way soon
Let’s begin our Dow Theory commentary for today.
The Transports, the Industrials and the SPY closed up. Volume was bearish as today’s volume was lower than yesterday’s. The overall pattern of volume remains bearish. If today’s volume had been remarkably strong, then I’d seen a change of the secondary trend as likely. However, given today’s muted volume, I tend to give the benefit of doubt to the ongoing secondary bearish reaction against the primary bull market.
The primary trend was reconfirmed as bullish on October 17th and November 13th, for the reasons given here and here.
The secondary trend is bearish (secondary reaction against primary bull market), as explained here.
Gold and Silver
SLV closed up, and GLD closed down. 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 6, 2014
|DOW THEORY PRIMARY TREND MONITOR SPY
|Bull market started
|Bull market signaled
|Current stop level: Secondary reaction low
|Unrlzd gain %
|Tot advance since start bull mkt
|Max Pot Loss %
The Dow Theorist