Monday, March 17, 2014

Dow Theory Update for March 17: Stocks closed up, and trends remain unchanged




 A rare rant (II)



Some days ago I wrote that I had decided not to renew my subscription to a well-known market advisory. Well, I am happy to report that I did not go cold turkey in spite of foregoing my daily “fix” of market commentaries. Furthermore, the time elapsed allows me to see things more clearly. I am convinced that the more famous the newsletter writer, the less likely his advice adds real value. I am also convinced that most subscribers are not really intent on making money but, rather, they only care about hearing political rants (my rant, is apolitical) and fantasizing about the future course of events in spite of flagrant contradictions as to the primary trend of the market. If we accept as a given than most people lose money in the markets, it shouldn’t come as a surprise that the most subscribers only care about market and political gossip and nothing more. To just talk about the primary trend and omit insults to the Fed, the Prez, etc. tends to be too boring.

This “rant” shouldn’t be interpreted as meaning that all market commentaries are worthless. Schannep’s “The Dow Theory” is, in my opinion, one of the best with a proven track record (which puts him on the top of newsletter writers) and a clear focus on the markets (and without the entire political or subconscious BS that tends to plague many market commentaries).


US Stocks

The SPY, Industrials and Transports closed up.


The primary trend remains bullish, as explained here, and more in-depth here.

The primary trend was reconfirmed as bullish on October 17th, 2013, and November 13th, 2013 and March 7th, 2014, for the reasons given here, here and here.


So the current primary bull market signal has survived three secondary reactions.

The secondary trend is bullish too, as explained here and here.


Gold and Silver

SLV and GLD closed down. 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. From such highs the market declined without jointly violating the June 27th, 2013 primary bear market lows.

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 and GDX closed down.  GDX is exceeding the last recorded secondary reaction highs whereas SIL is failing to do so.

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.

Here you have the figures for the SPY which represents the only market with a suggested open long position:

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.

Here you have the figures for the SPY which represents the only market with a suggested open long position:

 

Data for March 17, 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
03/17/2014 186.33
Current stop level: Secondary reaction low

174.17




Unrlzd gain % Tot advance since start bull mkt Max Pot Loss %




10.34% 18.64%   None


Sincerely,
The Dow Theorist

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