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
My blog:
Dow Theory Investment
  • Dow Theory Update For April 24: Precious Metals Finally Display Some Strength  0 comments
    Apr 24, 2013 4:39 PM | about stocks: SPY, DIA, IYT, GDX, SLV, SIL

    Indecisive action in stocks

    Let's see what the Dow Theory has in store for us today.

    Stocks

    Yesterday I was wondering whether under Dow Theory, we can declare the existence of a secondary reaction.

    After carefully studying the charts of the SPY, Industrials and Transports, I conclude that under strict Dow Theory, we cannot detect the existence of a secondary reaction yet.

    Thus, according to Schannep, we need at least two indices declining a minimum of 10 days with at least 8 trading days of declining prices for the average of all 3 indices. If we look at the chart of the SPY and Industrials we can see that we haven't reached this count yet. The Industrials have been declining for 8 days and the SPY has declined for 9 days. Only the Transports have been declining for more than 10 trading days. So we still have to wait. Both the SPY and the Transports have experienced peak to trough declines exceeding 3% which set them up for a secondary reaction, once the time requirement is fulfilled.

    The SPY and Transports closed up. The Industrials closed down. For the reasons explained above both the primary and secondary trend remains bullish.

    Today's volume was higher than yesterday's. Since most indices closed up, it seems that volume was mildly bullish.

    Gold and silver

    GLD lost inventory….Again! I consider Fofoa's latest post a must read in order to comprehend the fate of paper gold. You can find it here. If Fofoa is right, then we should brace ourselves for the following surprises:

    · The EUR is not as doomed as many are keen to say.

    · The USD is doomed (and maybe will collapse in hyperinflation throes).

    · Physical gold will eventually decouple from "paper" gold.

    In the meantime, GLD and SLV closed up. The primary and secondary trend remains bearish.

    The gold and silver miners ETFs, GDX and SIL, closed up. The primary and secondary trend remains bearish.

    Sincerely,

    The Dow Theorist

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