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Manuel Blay's  Instablog

Manuel Blay
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Investor and Trader As investor I'm deeply influenced by Dow Theory. I focus on the primary trend (1-2 years). My trading is short-term based (avg trade duration 4-5 days).
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Dow Theory Investment
  • Dow Theory Update For April 10: Stocks Make Higher Highs  0 comments
    Apr 10, 2013 5:08 PM | about stocks: SPY, DIA, IYT, GLD, SLV, GDX, SIL
    No changes in trends

    The GLD inventory conundrum solved? Read Fofoa's latest post

    It is no secret that when it comes to "fundamentals" about gold, I am an ardent follower of FOFOA. While this is a technical, Dow Theory blog, I know deep in my heart that when it comes to investing for the very long pull, "fundamentals" prevail over technical considerations. It is just a question of investment horizon. If our perspective is secular, then we'd better be right in our fundamental assessments, as neither the Dow Theory nor any technical devise will be of much help. As I wrote here:

    "I feel a "fundamental'" view is relevant even for technical hardliners. What good is technical analysis or the Dow Theory if, as it is suggested in the interview, your wealth risks being wiped out be it through inflation (USD solution to debt problems) or through punitive wealth taxes that amount to confiscation (EUR solution).

    Thus, the Dow Theory is not lying in a vacuum. The Dow Theory and technical analysis are just a means (a very good one, in my opinion) to protect wealth in tough times and gain a modest outperformance of ca. 2%. However, the technical investor should pay attention to much broader issues such as inflation, punitive taxes, the role of gold, etc."

    When it comes to physical gold (not just GLD) my time horizon is secular, and accordingly, I attach importance to fundamentals. Therefore, I pay lots of attention to the "fundamental" musings uttered by Fofoa as far as physical gold is concerned. His latest piece about GLD's inventory losses is a must-read. As you can guess, Fofoa doesn't necessarily derive a bearish reading from GLD's pukes, quite the contrary. You can visit his blog by clicking here.

    Zero Hedge seems to agree with Fofoa's tenets and reports that Central Banks have been buying gold hand over fist. Hence, in spite of declining prices those "in the know" have been hoarding gold.

    Yesterday, once again, GLD puked almost 5 tons. The bleeding continues.

    Stocks

    The SPY, Industrials and Transports closed up. The SPY made higher highs thus confirming the Industrials. The primary and secondary trend of the market remains bullish.

    Today's volume was higher than yesterday, which makes it a bullish volume day. Furthermore, today's high was made on higher volume than the last recorded one on 04/02/2013. Hence, today's high is a bullish volume pivot point. Thus, volume patterns are becoming less bearish. Here you have an updated chart showing the today's bullish pivot high.

     

     

    (click to enlarge)
    Volume is becoming less bearish

    Gold and silver.

    GLD and SLV closed down. The primary and secondary trend remains bearish.

    GDX and SIL, the gold and silver miners ETF, closed down. The primary and secondary trend remains bearish.

    Sincerely,

    The Dow Theorist

    Themes: Dow Theory Stocks: SPY, DIA, IYT, GLD, SLV, GDX, SIL
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