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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).
My blog:
Dow Theory Investment
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  • Dow Theory Update For July 29: Lessons (Re)Learned From The Precious Metals Universe And Chinese Stocks
    Trends remain unchanged

    US STOCKS

    The primary trend remains bullish, as explained here and here.

    The secondary trend is bearish (secondary reaction against the primary bull market), as explained here.

    http://www.dowtheoryinvestment.com/2015/07/dow-theory-update-for-july-1-dissecting.html

    All indices rallied more than 3% off their July 8th closing lows. So now either:

    a) Stocks jointly violate their secondary reaction lows, in which case a primary bear market will be signaled.

    b) Stocks jointly better their last recorded primary bull market highs (May 19th, for the INDU, May 21st, for the SPY, and May 18th for the TRAN), in which case the primary bull market will be reconfirmed.

    GOLD AND SILVER

    The primary and secondary trend is bearish as explained here.

    http://www.dowtheoryinvestment.com/2015/07/dow-theory-update-for-july-15-primary.html

    By the way, the steep decline that followed SLV's and GLD's primary bear market signal, confirms that one should not "hope" for a rebound following a primary bear market signal in an attempt to get a better "exit" price. Experience says that ca. 2/3 of the time, a small rally follows immediately after the primary bear market signal. However, 1/3 of the time, such a rally fails to materialize and we get an even steeper decline. The money won by not selling immediately is more than lost in the 1/3 of occurrences when a collapse follows a primary bear market signal (i.e. 1929 and 1987 crash among other instances).

    Bottom line: One must react as soon as possible once a primary bear market signal has been flashed.

    GOLD AND SILVER MINER'S ETFs

    As to the gold and silver miners ETFs,on 3/10/15 SIL violated its 12/16/2014 primary bear market closing low. On July 8, 2015 SIL violated its March 10th, 2015 closing low.

    On 7/1/2015 GDX violated its secondary reaction lows of 3/10/2015, and hence, it confirmed the bearish action of SIL thereby signaling a primary bear market signal.

    Thus the primary and secondary trend for SIL and GDX is bearish.

    By the way, my musings concerning the need to promptly and without hesitation honor the Dow Theory signals do fully apply to SIL and GDX. Price action after the primary bear signal offered no respite to sellers. No rally, no mercy.

    Sincerely,

    The Dow Theorist

    P.S: When I find time (oh my! Time is always in very short supply) I would like to write about the Chinese stock market debacle from a Dow Theory perspective. What has happened to Chinese stocks should give us food for thought concerning the US stock market. I have many times written that, after all, US stocks have been very lenient to investors during the last +115 years. Not only because they mainly went up, but because they behaved in an "orderly" manner (i.e. by producing close enough secondary reactions to give us good exit points, that is to contain losses and lock in profits). Chinese stocks seem to be more unbecoming to investors, and hence, they offer a wealth of insights for Dow Theorists in order to prepare for the worst ("worst" not being necessarily "lower" prices, but abrupt declines with no intervening secondary reactions). I hope to offer a couple of useful thoughts in a future post of this Dow Theory blog. How would we trade US Stocks, if one day they behaved like Chinese stocks? Think about it.

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Jul 29 3:14 PM | Link | 1 Comment
  • Dow Theory Update For July 15: Primary Bear Market For (Paper) Gold And Silver Signaled Today

    I don't have much time to blog today. However, take my word for it: GLD by violating March 17, 2015 closing lows has signaled a primary bear market today.

    Thus, the entire precious metals universe (and their gold and silver miners ETFs) is in a bearish mode.

    The primary trend for stocks remains bullish, albeit the set up for a primary bear market has been recently completed, as explained here.

    Sincerely,

    The Dow Theorist

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Jul 15 5:37 PM | Link | 1 Comment
  • Dow Theory Update For July 13: US Stocks Set Up For Primary Bear Market
    Trends unchanged

    US STOCKS

    The primary trend remains bullish, as explained here and here.

    The secondary trend is bearish (secondary reaction against the primary bull market), as explained here.

    http://www.dowtheoryinvestment.com/2015/07/dow-theory-update-for-july-1-dissecting.html

    The Transports have rallied more than 3% off their July 8th closing lows. The SPY and Industrials have failed to reach the 3% threshold. However, in order to set up stocks for a primary bear market signal we don't need confirmation. Just one index rallying more than three percent suffices to set up the stocks market for a primary bear market signal. So now either:

    a) Stocks jointly violate their secondary reaction lows, in which case a primary bear market will be signaled.

    b) Stocks jointly better their last recorded primary bull market highs (May 19th, for the INDU, May 21st, for the SPY, and May 18th for the TRAN), in which case the primary bull market will be reconfirmed.

    GOLD AND SILVER

    The primary trend is bullish as explained here.

    The secondary trend turned bearish on February 6th, 2015 (secondary reaction against the primary trend) as explained here.

    The setup for a primary bear market signal was completed on March 24, 2015 as explained here.

    Thus, now:

    a) Either the primary bull market closing highs 01/22/2015 are bettered in which case the primary bull market will be reconfirmed.

    b) Or the secondary reaction lows are violated in which case a primary bear market will be signaled. If we are to judge according to recent action, we are very close to the joint violation of the secondary reaction lows. Silver violated yesterday its secondary reaction lows. Gold, though, refused to do so, and hence, unconfirmed movements have no relevance under the Dow Theory. If/when gold violates its secondary reaction lows, the primary bear market will be signaled.

    Is paper gold dying? Some thoughts about this vital aspect (to be taken with a high dose of skepticism, as this is "fundamental" thinking) here.

    GOLD AND SILVER MINER'S ETFs

    As to the gold and silver miners ETFs,on 3/10/15 SIL violated its 12/16/2014 primary bear market closing low. On July 8, 2015 SIL violated its March 10th, 2015 closing low.

    On 7/1/2015 GDX violated its secondary reaction lows of 3/10/2015, and hence, it confirmed the bearish action of SIL thereby signaling a primary bear market signal.

    Thus the primary and secondary trend for SIL and GDX is bearish.

    Sincerely,

    The Dow Theorist

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Jul 13 5:34 PM | Link | Comment!
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