SLV makes lower closing lows unconfirmed by GLD
US Stocks
The SPY, Industrials and
Transports closed up on decreasing volume, which has bearish connotation. Take
a look at the chart below red arrows (bearish volume days) dominate the
landscape. Furthermore, volume tended to contract during the latest rally,
which is not bullish. The highest volume day was April 11th (last
bottom), and all subsequent “up” days have experienced lower volume readings.
 |
| Volume remain bearish and the market is overbought |
The Transports managed to
exceed their last recorded closing highs of April 2nd. The SPY and
the Industrials didn’t deign to confirm. The longer such non-confirmation
persists, the higher the odds for a reversal of the trend of secondary
proportions.
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.
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.
Look at the chart below. It
shows SLV violating its last recorded closing lows (red horizontal line), while
GLD refuses to do so. The longer such a non-confirmation persists, the higher
the odds for a short term rally. Please mind that the last recorded lows shown
with horizontal red lines are declines within a secondary reaction against the
primary bear market, so their relevance is muted. It is not the same the
non-confirmation around primary bull/bear market high/lows or even secondary
reaction ones, than around the ripples that occur within secondary moves.
Therefore, the current lack of confirmation may only indicate (if it persists) a
rally of minor proportions.
 |
| Last minor lows were violated by SLV, and GLD refused to do so. Is this pullback nearing an end? |
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.
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. I profusely
explained that SIL and GDX set up for a primary bull market signal. You can
find all the relevant information from a Dow Theory standpoint here.
Please mind that a setup is
not the real thing. So the primary trend has not turned bullish yet (or maybe “never”).
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.
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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