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Dow Theory Update For Nov 1: Bullish Day For Stocks

Nov. 02, 2012 8:40 AM ETSPY, DIA, IYT, GLD, SLV, GDX, SIL
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No changes in trends

Let's begin our Dow Theory commentary on this blog.

The SPY, the Industrials and the Transports closed firmly up today. Both the Industrials and the SPY broke above the trading range that started on 10/23/2012. The Transports, having been always stronger, were not caught in a narrow range, so they had nothing to break. Mere upward movement.

Dow Theorist Russell continues turning more bullish. He has again remarked that the Transports are displaying good relative strength. Furthermore, he recently stated that silver and their miners look very strong, something you have been reading on this Dow Theory blog since the end of August 2012 and all through this light correction..

The only, albeit just slightly, negative note was decreasing volume on the SPY. An up day with decreasing volume implies that the upward movement is not backed by volume, which is a bearish sign. Furthermore, the pattern of volume for the last few days has been bearish.

Here you have an updated chart with the SPY action and volume patterns.

Volume in the last few days mostly bearish

Therefore, even though yesterday's action was bullish it is too early to tell under Dow Theory that the secondary reaction is over. Patience is warranted. However, it is important to bear in mind that the primary trend remains bullish and that 70% of Dow Theory primary bull market signals end up in profits. So the odds continue favoring the end of the secondary reaction and a new primary swing up.

As to gold, silver and their respective miners, all of them closed mildly down for today. Technically, nothing has changed. The primary trend remains bullish.

Sincerely,

The Dow Theorist

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