Tuesday, November 11, 2014

Dow Theory Update for November 11: Primary and secondary trends remain unchanged for stocks, gold, silver and their miners

On the last primary bear market signal

I have not forgotten that I owe my readers a deeper explanation concerning the last (disputed) primary bear market signal. I have not been losing my time, since to date Schannep of “thedowtheory.com” and author of “Dow Theory for the 21st Century" and I continue discussing this matter in our private correspondence. I hope to reveal soon the result of our brainstorming, which confirms me that he is the best alive Dow Theorist by a long shot.

US Stocks

The SPY, and the Industrials closed up and the Transports closed down

The primary trend remains bullish, as explained here.

The secondary trend is bullish.

Gold and Silver

SLV and GLD closed UP. The primary bear market was reconfirmed on October 3rd 2014, as GLD finally broke below the June 27th, 2013 primary bear market closing lows (something which SLV had already done on Sept 17, 2014). As lower lows have been confirmed, the primary bear market has been reconfirmed. 

Eventually, the tug of war between an eternal secondary (bullish) reaction against the primary bear market and the primary bearish trend has been resolved in favor of the continuation of the primary trend. The old adage comes to my mind: “don’t fight the trend”.

Well, I am happy that I didn’t fight the trend and, while reporting the existence of a secondary bullish trend, I warned my readers that a secondary reaction is not the real thing and hence, we had to wait until the actual primary bull market signal, which, as we now see, has failed to materialize.

All in all, my strict application of the Dow Theory prevented me from become erroneously bullish (as famed Richard Russell, of the “Dow Theory Letters” wrongly did). We were close to a primary bull market signal, but being close means nothing under the Dow Theory. 

For the reasons I explained here, and more recently here the primary trend remains bearish. Of course, the secondary trend is bearish too.

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 bearish.

On a statistical basis the primary bear market for GLD and SLV is getting old. Almost years have elapsed since the bear market signal was flashed. However, as price action has just shown, 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. When will this vicious bear market end? I don’t know, and I don’t need to know. I only know that the Dow Theory will see to my being informed punctually when a new primary bull market is born. 

As to the gold and silver miners ETFs, SIL and GDX closed up. The primary bear market was re-confirmed on October 27th, 2014 as explained here.
The secondary trend is bearish too.

The primary trend for SIL and GDX is clearly bearish, as was profusely explained here and here.

The Dow Theorist

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