Industrials make higher high
Let's get started with our Dow Theory commentary for today.
The SPY,Industrials and Transports closed up.
The primary trend was reconfirmed as bullish on October 17th, for the reasons given here.
Today's volume was much weaker than yesterday's. This is bearish, as higher prices were not met by stronger volume. I consider volume to be bearish for the reasons given here and here. Furthermore, the trend line of volume of the last few days is ominously bearish, as volume has steadily contracted as prices advanced and has expanded as prices declined. Here you have an updated chart:
The persistent bearish pattern of volume has not escaped trader Tom V, of the "TrendFollowing Trader" blog, as he has noticed heavy volume distribution across US equity indices. Go and read his post to get convinced.
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 closed down, and GDX closed up. SIL and GDX are still flirting with a primary bear market signal, as was explained here. Take a look at the chart and judge for yourself. If the red horizontal lines get jointly violated, kiss good-bye to the current primary bull market.
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.
The Dow Theorist