Manuel Blay's  Instablog

Manuel Blay
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Trader and investor. My trading is short-term based (avg trade duration 4-5 days). As investor I'm deeply influenced by Dow Theory
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Dow Theory Investment
  • Dow Theory Update For Jan 15: Mildly Bullish Day  0 comments
    Jan 15, 2013 4:56 PM | about stocks: SPY, DIA, IYT, GLD, SLV, GDX, SIL

    Gold refuses to confirm silver.

    Let's get started with today's post in this Dow Theory blog.

    The SPY, the Industrials and the Transports closed up. The Industrials and the Transports have jointly bettered yesterday's highs which, since yesterday's action also entailed new confirmed highs, is bullish. The primary trend and secondary trend for stocks remains bullish.

    Volume today was higher than yesterday's. Since it was an up day, it has a bullish implication. The daily pattern of volume is now turning unambiguously bullish. Furthermore, volume at pivots is bullish as I explained here.

    Therefore, the overall pattern of volume is bullish short term (i.e. 2-4 weeks).

    So we have one of those rare instances where all the elements of technical action are bullish. The primary trend is bullish, so is the secondary trend, and volume is clearly supporting the bullish trend. Here you have the latest volume chart:



    (click to enlarge)
    Volume persistently bullish

    While being such technical action bullish, my experience tells me that so much technical bullishness tends to beget a short term reversal. However, after such reversals, the inherent bullishness embedded in the market reasserts itself with further advances.

    In any instance, this is not a market to short, all the doom and gloom notwithstanding.

    I am preparing a new "saga" of posts concerning vital statistics concerning the Dow Theory that every investor should know. Readers of this Dow Theory blog stay tuned. Have you ever wondered how many years the Dow Theory outperforms buy and hold? Have you ever wondered what is the average return of the Dow Theory when the going gets tough (secular bear markets) versus buy and hold? Have you ever wondered what was the deepest draw down experienced by followers of the Dow Theory? When does the Dow Theory shine? All these questions will be little by little answered in dedicated posts.

    Gold and silver closed up today. Silver (NYSEARCA:SLV) for a second consecutive day, closed above its 01/02/2013 closing high. Gold, once again, failed to confirm and, in spite of closing up, refused to exceed the 01/02/2013 close. The longer it takes for gold to confirm silver action, the more dubious the inception of a new decent rally. Here you have an updated chart reflecting recent gold and silver action:



    (click to enlarge)
    Gold and silver remain bearish under Dow Theory. Gold refuses to confirm the timid advance made by silver

    The primary and secondary trend for GLD and SLV remains bearish.

    SIL and GDX closed up today. The primary trend remains bullish, and the secondary trend remains bearish.


    The Dow Theorist

    Stocks: SPY, DIA, IYT, GLD, SLV, GDX, SIL
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