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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
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  • Dow Theory Update: Setup For Primary Bear Market In Stocks Completed Today
    The primary trend remains bullish, though.

    US stocks

    The Industrials, Transports and SPY closed up.

    The SPY and Industrials have risen more than 3% from the secondary reaction lows. Since the rally from the lows took 2 days (one day would not be enough as per Schannep's rules), US stocks set up for a primary bear market signal. To complete the primary bear market setup it was only necessary for one index to rally more than 3%. However, in this case, two indices have deigned to rally more than 3%.

    Here you have the details of the rally:

     

     



    INDUSTRIALSTRANSPORTSSPY
    17778.15 8953.33 206.78
    17068.87 8740.52 197.91
         
    0.04155401 0.02434752 0.04481835

    So now two things may happen:

    1) Stocks extend their gains and break up the last recorded primary bull market closing highs, in which case the primary bull market would be reconfirmed, and the current secondary reaction would be declared as extinguished (and hence, the secondary trend would be labeled as "bullish" too). The blue horizontal line on the chart below shows the relevant levels to be broken up.

    2) The SPY (which in this case has rallied more than 3%) together with other index (be it the Industrials or the Transports) violate the secondary reaction lows, in which case a primary bear market would be signaled. The red horizontal line on the chart below shows the relevant levels to be violated.

    (click to enlarge)
    Two options left: Either primary bull market reconfirmed or primary bear market will be signaled

    The primary trend remains bullish, as explained here.

    The secondary trend is bearish, as there is an ongoing secondary reaction, as explained here.

    Gold and Silver

    SLV and GLD closed up. The primary bear market was reconfirmed on October 3rd 2014, as GLD finally broke below the June 27th, 2013 primary bear market closing lows (something which SLV had already done on Sept 17, 2014). As lower lows have been confirmed, the primary bear market has been reconfirmed.

    For the reasons I explained here, and more recently here the primary trend remains bearish.

    The secondary trend is bullish (secondary bullish reaction against the primary bear market), as explained recently here. Furthermore, SLV and GLD completed the setup for a primary bull market, as explained here.

    So now there are only two possibilities left:

    1) Either both SLV and GLD break above the secondary reaction highs, in which case a primary bull market would be signaled.

    2) Or both SLV and GLD violate the last recorded primary bear market lows, in which case, the primary bear market would be reconfirmed.

    In spite of the secondary bullish reaction, the primary trend remains bearish too.

    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 bearish.

    On a statistical basis the primary bear market for GLD and SLV is old. Almost two years have elapsed since the bear market signal was flashed. 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. When will this vicious bear market end? I don't know, and I don't need to know. I only know that the Dow Theory will see to my being informed punctually when a new primary bull market is born.

    Gold and Silver miners ETFs (GDX and SIL)

    As to the gold and silver miners ETFs, SIL and GDX closed up. The primary bear market was re-confirmed on October 27th, 2014 as explained here. The primary trend for SIL and GDX is clearly bearish, as was profusely explained here and here.

    The secondary trend is bearish too, and no secondary reaction has been signaled yet.

    Sincerely,

    The Dow Theorist

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Dec 18 5:20 PM | Link | Comment!
  • Dow Theory Update For December 17: Setup For Primary Bull Market Signal In SLV And GLD Completed


    Trends remain unchanged.

    US stocks

    The Industrials, Transports and SPY closed up.

    The primary trend remains bullish, as explained here.

    The secondary trend is bearish, as there is an ongoing secondary reaction, as explained here.

    Gold and Silver

    SLV closed up, and GLD closed down. The primary bear market was reconfirmed on October 3rd 2014, as GLD finally broke below the June 27th, 2013 primary bear market closing lows (something which SLV had already done on Sept 17, 2014). As lower lows have been confirmed, the primary bear market has been reconfirmed.

    For the reasons I explained here, and more recently here the primary trend remains bearish.

    The secondary trend is bullish (secondary bullish reaction against the primary bear market), as explained recently here. Yesterday, I hinted the followers of this Dow Theory blog that I feet that SLV has experienced a pullback of enough amplitude so that GLD and SLV have completed the setup for a primary bull market signal. Well, my gut feeling was right. The highest point reached by SLV was 16.37 on 12/10/2014. The lowest point was 15.08 on 12/16/2014, and hence declined by 7.88%. In my post of December 11, I wrote that SLV should decline by at least 7.78% in order to have a pullback of sufficient magnitude so that both SLV and GLD set up for a primary bull market signal. Please mind that the principle of confirmation (so dear to Dow Theorists) does not apply when it comes to the pullback that follows the secondary bullish reaction against the primary bear market.

    Here you have the spreadsheet containing the calculations.

     

     



     SLV GLD
    Sec Reaction high16.37 118.19
    Pullback15.08 114.14
        
    total decline %-7.88026878 -3.42668584

    And here you have an updated chart. The blue reactangle displays the secondary reaction against the ongoing primary bear market, while the orange one displays the pullback experience by SLV which has set up both SLV and GLD for a primary bull market signal:

    (click to enlarge)
    Will this time a primary bull market be signaled? Maybe in 2015?

    So now there are only two possibilities left:

    1) Either both SLV and GLD break above the secondary reaction highs, in which case a primary bull market would be signaled.

    2) Or both SLV and GLD violate the last recorded primary bear market lows, in which case, the primary bear market would be reconfirmed.

    So now we have to wait. It bothers me the lack of stamina of the gold and silver miners ETFs. Nonetheless, less wait for the verdict of price action.

    In spite of the secondary bullish reaction, the primary trend remains bearish too.

    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 bearish.

    On a statistical basis the primary bear market for GLD and SLV is old. Almost two years have elapsed since the bear market signal was flashed. 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. When will this vicious bear market end? I don't know, and I don't need to know. I only know that the Dow Theory will see to my being informed punctually when a new primary bull market is born.

    Gold and Silver miners ETFs (GDX and SIL)

    As to the gold and silver miners ETFs, SIL and GDX closed up. The primary bear market was re-confirmed on October 27th, 2014 as explained here. The primary trend for SIL and GDX is clearly bearish, as was profusely explained here and here.

    The secondary trend is bearish too, and no secondary reaction has been signaled yet.

    Sincerely,

    The Dow Theorist

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Dec 17 5:30 PM | Link | Comment!
  • Dow Theory Update For December 4: Why Buy And Hold Is Dead

    Trends for precious metals and US stocks remain unchanged.

    Zero Hedge reports that the average lifespan of US corporations in the S&P 500 has never been shorter. Now is down to a dismal 15 years:

    http://www.zerohedge.com/news/2014-12-04/here-reason-why-average-lifespan-us-corporations-has-never-been-shorter

    Do you still believe that buy and hold for individual stocks works? This is why even when dealing with individual stocks, a Dow Theory filter (i.e. being out of all stocks when a primary bear market has been signaled) is a very sensible course of action.

    Sincerely,

    The Dow Theorist

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Dec 04 5:14 PM | Link | Comment!
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