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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 22: Transports Make Higher Closing Highs Unconfirmed  0 comments
    Apr 22, 2014 5:11 PM | about stocks: SPY, DIA, IYT, GLD, SLV, GDX, G
    SLV makes lower closing lows unconfirmed by GLD

    US Stocks

    The SPY, Industrials and Transports closed up on decreasing volume, which has bearish connotation. Take a look at the chart below red arrows (bearish volume days) dominate the landscape. Furthermore, volume tended to contract during the latest rally, which is not bullish. The highest volume day was April 11th (last bottom), and all subsequent "up" days have experienced lower volume readings.

    (click to enlarge)
    Volume remain bearish and the market is overbought

    The Transports managed to exceed their last recorded closing highs of April 2nd. The SPY and the Industrials didn't deign to confirm. The longer such non-confirmation persists, the higher the odds for a reversal of the trend of secondary proportions.

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

    The primary trend was reconfirmed as bullish on October 17th, 2013, and November 13th, 2013 and March 7th, 2014, for the reasons given here, here and here.

    So the current primary bull market signal has survived three secondary reactions.

    The secondary trend is bullish too, as explained here and here.

    Gold and Silver

    SLV closed up, and GLD closed down. For the reasons I explained here, and more recently here the primary trend remains bearish.

    Look at the chart below. It shows SLV violating its last recorded closing lows (red horizontal line), while GLD refuses to do so. The longer such a non-confirmation persists, the higher the odds for a short term rally. Please mind that the last recorded lows shown with horizontal red lines are declines within a secondary reaction against the primary bear market, so their relevance is muted. It is not the same the non-confirmation around primary bull/bear market high/lows or even secondary reaction ones, than around the ripples that occur within secondary moves. Therefore, the current lack of confirmation may only indicate (if it persists) a rally of minor proportions.

    (click to enlarge)
    Last minor lows were violated by SLV, and GLD refused to do so. Is this pullback nearing an end?

    For the primary trend to turn bullish, SLV and GLD should jointly break above the secondary (bullish) reaction highs. As a reminder, the secondary reaction closing highs were made on August 27th, 2013. From such highs the market declined without jointly violating the June 27th, 2013 primary bear market lows.

    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.

    On a statistical basis the primary bear market for GLD and SLV is getting old. More than one year since the bear market signal was flashed has elapsed. However, I am extremely skeptical as to the predictive power of statistics. I prefer price action to guide me, and the Dow Theory tells me that the primary trend remains bearish until reversed.

    Furthermore, the June 27, 2013 lows remain untouched. The longer this situation lasts, the higher the odds that something might be changing. But I wait for the verdict of price action.

    As to the gold and silver miners ETFs, SIL and GDX closed up. I profusely explained that SIL and GDX set up for a primary bull market signal. You can find all the relevant information from a Dow Theory standpoint here.

    Please mind that a setup is not the real thing. So the primary trend has not turned bullish yet (or maybe "never").

    The secondary trend is bullish, as explained here. In spite of short term bullish accomplishments, SIL and GLD are not in a primary bull market.

    The primary trend for SIL and GDX remains, nonetheless, bearish, as was profusely explained here and here.

    The secondary trend is bullish, as explained here. In spite of short term bullish accomplishments, SIL and GLD are not in a primary bull market.

    The primary trend for SIL and GDX remains, nonetheless, bearish, as was profusely explained here and here.

    Sincerely,

    The Dow Theorist

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