Friday, January 31, 2014

Dow Theory Update for January 31: Stocks close down on increasing volume




Gold and silver should rally soon or else….


Let’s begin our Dow Theory commentary for today.

US stocks

The Transports, the Industrials and the SPY closed down. Volume, once again, was bearish as today’s volume was higher than yesterday’s (when stocks closed up). So, we are seeing expanding volume on declines and contracting volume on rallies…not a nice picture. While excessive bearish volume usually sets up stocks for a short rally (as volume becomes “oversold”), it tends to portray lower prices in the days ahead. The only thing that could change the volume picture would be a down day on lower volume followed by an up day on surging volume. Hitherto we haven’t seen this and, accordingly, I feel that the odds for the ongoing secondary reaction to continue remain quite high. Here you have the an updated chart displaying volume:

 
Bearish volume increases the odds for lower prices in the days ahead
 
The primary trend remains bullish, as explained here, and more in-depth here.

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

The secondary trend is bearish (secondary reaction against primary bull market), as explained here.

Gold and Silver

SLV closed down and GLD closed up. For the reasons I explained here, and more recently here, the primary trend remains bearish. 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. The secondary trend is bullish, as explained here.

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 January 31 , 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
01/31/2014 178.18
Current stop level: Secondary reaction low

165.48




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




5.51% 13.45% 2.05%


Sincerely,
The Dow Theorist

Thursday, January 30, 2014

Dow Theory Update for January 30: Stocks closed up and volume fails to confirm




Strebler, of the Dow Theory Letters, nails it down, once again


Jon Strebler, Russell’s associate, of the “Dow Theory Letters”, has recently nailed it down again when he wrote “The fundamentalists tell us what should happen, but have a tough time identifying when

I couldn’t agree more. Strebler adds that not only poor timing plagues fundamental analysis. More often than not the fundamental analysis itself is flawed and thus the “when” does never materialize.

I feel Strebler is becoming better and better, and I praise him accordingly.

On the other hand, I regretfully have to say that Russell is being overtly imprecise. He interchangeably refers to “bear market” whatever seems to suit him best. Thus, he recently wrote that the Industrials have plunged to a new bear market low, which left me scratching my head. Does he imply that the primary trend is bearish? I don’t know. What I do know is that both under the classical Dow Theory (which he is supposed to follow) and Schannep’s, the primary trend is bullish as of this writing.

The only “bearishnes” I see on my Dow Theory radar, is the ongoing secondary reaction against the primary bull market. Furthermore, such a correction hasn’t been signaled yet, if one is to follow the classical Dow Theory, as Russell is supposed to do. Thus, Russell by not clearly defining the proper timeframe of his bearishness is inadvertently misleading readers.

US stocks

The Transports, the Industrials and the SPY closed up. Yesterday, I wrote that I saw two small “positives” on volume action provided “soon” stocks close up on big volume. Well, today stocks closed up, albeit volume was muted and clearly didn’t surge. Let’s see what happens tomorrow, but the longer it takes for stocks to rally on big volume, the higher the odds that the secondary reaction is far from over.

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

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

The secondary trend is bearish (secondary reaction against primary bull market), as explained here.

Gold and Silver

SLV and GLD closed down. For the reasons I explained here, and more recently here, the primary trend remains bearish. 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.

As to the gold and silver miners ETFs, SIL and GDX closed down. The secondary trend is bullish, as explained here.

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 January 30 , 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
01/30/2014 179.23
Current stop level: Secondary reaction low

165.48




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




6.13% 14.12% 2.05%


Sincerely,
The Dow Theorist

Wednesday, January 29, 2014

Dow Theory Update for January 29: Stocks break last minor lows on increasing volume




Secondary reaction continues


Let’s get started with our Dow Theory commentary for today.

US stocks

The Transports, the Industrials and the SPY closed down. Furthermore, all indices violated the last recorded minor low (Jan 27), which adds credence to the ongoing secondary reaction. Volume was larger than yesterday’s, which is also a bearish sign.

However, provided tomorrow or latest the day after tomorrow, stocks stabilize, I see two relatively good signs in volume:

Firstly, today’s volume was smaller than the volume we saw on January 27 when the markets closed also down.

Secondary, both today and on January 27, volume was smaller than the volume we saw on Friday, January 24.

So subtly, it seems that volume is slowly drying up as the stock indices make lower lows. This is a potential positive. However, for this “positive” to become actual, we need to see soon an “up” day on strong volume. Until this happens, the odds favor the continuation of the secondary bearish trend (secondary reaction).

Take a peek at the chart below and judge for yourself:

Volume has been bearish, but depending on tomorrow's action we could see "green shots"
  
The primary trend remains bullish, as explained here, and more in-depth here.

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

The secondary trend is bearish (secondary reaction against primary bull market), as explained here.



Gold and Silver

SLV and GLD closed up. For the reasons I explained here, and more recently here, the primary trend remains bearish. 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.

As to the gold and silver miners ETFs, SIL and GDX closed up. The secondary trend is bullish, as explained here.

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 January 29 , 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
01/29/2014 177.28
Current stop level: Secondary reaction low

165.48




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




4.98% 12.87% 2.05%



Sincerely,

The Dow Theorist