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Dow Theory Update For October 31: Are Stocks Topping Out?

|Includes:DIA, GDX, GLD, IYT, SIL, SLV, SPDR S&P 500 Trust ETF (SPY)

Deflationary day for stocks and precious metals

Let's get started with our Dow Theory commentary for today on this blog.

US stocks

The SPY, Industrials and Transports closed down.

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

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

Today's volume was higher than yesterday's, which is bearish, as lower prices were met by stronger volume. I consider volume to be bearish for the reasons given here and here. Furthermore, the trendline of volume of the last few days is ominously bearish, as volume has steadily contracted as prices advanced and has expanded as prices declined.

Gold and Silver

SLV and GLD closed down. For the reasons I explained here, and more recently here, I feel 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.

Here, I explained that GLD and SLV set up for a primary bull market signal. However, a setup is not the same as the "real thing," namely the primary bull market; thus, many "setups" do not materialize and until the secondary reaction closing highs are jointly broken up, no primary bull market will be signaled.

SIL and GDX closed down. SIL and GDX, unlike GLD and SLV, are in a primary bull market under the Dow Theory, as explained here and here.

The secondary trend is bearish, which is tantamount to saying that there is an ongoing secondary reaction against the primary bullish trend, for the reasons given here.

Sincerely,

The Dow Theorist

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