And SPY’s higher highs remain unconfirmed
After my brief hiatus, let’ see what the Dow Theory
has in store for us.
The SPY, Industrials and
Trasnports and Industrials closed down. The SPY exceeded its last recorded
closing highs on February 28th. 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. Today’s action makes such a
confirmation even more doubtful.
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 confirmed
closing highs (December 31, 2013) were broken out, the primary bull market
would be reconfirmed. You can gather more information about the current
juncture, here and here.
Here you have an updated
chart.
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The SPY (bottom) consistently exceeded the 12/31 closing highs. Lack of confirmation may be indicative of distribution |
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. GLD
made a higher closing high unconfirmed by SLV. 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 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.
Here
you have the figures for the SPY which represents the only market with a
suggested open long position:
Data for March 3, 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 | 03/03/2014 | 184.98 | |
Current stop level: Secondary reaction low | 174.17 | ||
Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
9.54% | 17.78% | None |
Sincerely,
The Dow Theorist
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