A rare rant
Today I decided not to renew my subscription to one
market advisory (whose name I'd rather not mention).
It’s been a hard decision to make, since one becomes
accustomed to the daily “fix” on market commentaries. Anyhow, to realize that
one’s time is better spent in minding my own business (or even writing on this
Dow Theory blog) than reading a never-ending stream of contradictions, appeals
to the subconscious (which, in my humble opinion, cannot be, at least for me,
any basis for consistent investment), staled news (which I can find for free on
Zero Hedge) and radical and ungrounded changes of mind as to the direction of
the market. Of course, I have nothing against changing one’s mind (being
flexible is vital in the markets). Nonetheless, I detest the lack of grounding
(since dreams do not qualify as “grounding”). Being a good writer is not enough
when it comes to determining the trend of the markets and past reputation (which was well deserved in times past) isn't enough to keep subscribers happy.
Something is wrong when the monetary component of the
subscription pales in comparison with the real value of my time. Something is
wrong when as a subscriber one realizes that the money spent not only does not bring
any value at all but is counterproductive, since it deprives me of 20 minutes of my
time a day.
In retrospective, I should have taken this decision
many months ago. Old habits die hard.
It is very difficult to find market advisories that
really add value, that really help you be consistently on the right side of the
market.
Well, now let’s move onto the markets.
US Stocks
The SPY,
Industrials and Transports and Industrials closed up. The SPY exceeded its last
recorded closing highs once again, and, once again such higher highs have not
been confirmed by the Industrials and/or Transports. The Transports have been
very close to exceeding their December 31st, 2013 closing highs. The
longer the non-confirmation persists, the more suspect the SPY’s higher highs
become.
Here you can see an updated chart:
![]() |
The Transports (middle) were close to confirming the SPY's (bottom) higher highs |
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 and here.
So days of price action go by,
but technically nothing changes. The Industrials and/or the Transports need to
close above the December 31, 2013 closing highs to re-confirm the primary bull
market (and turn the secondary trend bullish, as well). The alternative is the
violation of the secondary reaction lows (February lows), which would signal a
primary bear market. All we are seeing is just noise. The last few days are a
vivid example of the Dow Theory helping us to distinguish between relevant
price action and just noise.
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.
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.
Sincerely,
The Dow Theorist
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