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Manuel Blay's  Instablog

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 For April 10: Trends Unchanged
    More on Gary Antonacci

    One gentle reader recommended me this interview with Gary Antonacci. I recommend it to the readers of this Dow Theory blog too.

    If I were to forget all about the Dow Theory, dual momentum would be my choice without hesitation. Furthermore, one could have two different portfolios: The first one, strictly Dow Theory based, the second one, as per "dual momentum." Bear in mind, though, that "dual momentum" seems to have deeper drawdowns than the Dow Theory. On the other hand, and even though, its back-tested (not real) track record is much shorter, it seems to extract slightly more profits from the market than the Dow Theory. More about these aspects in a future post.

    In the interview, he praises Jeremy Siegel author of "Stocksfor the long run." He says that it has been proven that US stocks consistently outperform the stocks of other countries.

    I agree. I have one reservation, though: Past performance is no indicative of future performance. Most analysts assume that the US will continue to be the best-performing country as it did in the last 200 years. While I am a trend follower, and hence, if the US is "trending positive" I would never "fade it," as a foreigner, and being skeptical about easy money, I would at the very least consider the possibility that maybe one day the US is not going to be the best-performing economy (or stock market) in the world. If this were to happen, the Dow Theory (and Dual Momentum too) would come in handy, as:

    a) Negative trends would be spotted by the Dow Theory, thus keeping us out of the US Stock market.

    b) Positive trends would be spotted by the Dow Theory in other stock markets (let's say, Germany). Please bear in mind that the Dow Theory is also applicable to other markets. More about this vital aspect here.

    c) Dual Momentum would prompt us to invest in foreign stocks markets, as it has done according to the back tests.

    As to the trends: Lull and meandering continues. No changes, and hence I refer to what I wrote in past posts.

    Have a nice weekend.


    The Dow Theorist.

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Apr 10 6:39 PM | Link | Comment!
  • Dow Theory Update: This Is Getting Boring; But Nobody Said That Investing Should Be Fun. It Must Be Profitable
    Primary and secondary trends unchanged.

    This is getting boring. Weeks pass by and US Stocks, gold, silver and their miners ETFs have not changed their trends. We remain disciplined and continue watching the markets.

    So what I wrote in my last post (and links pertaining thereto) remains fully valid.


    The Dow Theorist

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Apr 09 5:49 PM | Link | Comment!
  • Dow Theory Update For April 2: Primary And Secondary Trends Continue Unchanged

    Lull in the markets

    Days pass by and trends don't change. No Dow Theorist ever promised that applying the Dow Theory is going to be thrilling. It is dry, and does not lend itself to fancy and entertaining reading.

    US Stocks remain caught in a narrow range, which seems to be getting narrower for the SPY and the Industrials (see chart below). One way or the other, stocks should soon show us the way to go.

    (click to enlarge)
    SPY (bottom) and Industrials see shrinking volatility

    The Transports, on the other hand, have violated their January 30, 2015 closing lows (secondary reaction lows), something which has not been confirmed by the Industrials and the SPY. As you know, one of the tenets of the Dow Theory is than unconfirmed movements tend to be deceptive.

    Schannep, of "" has just alerted his subscribers that several studies extraneous to the Dow Theory (i.e. use of margin in broker's accounts) seem to be anticipating a primary bear market. Thus, even though, he has not issued a "sell" signal, as he acts on actual signals, not mere conjectures, he clearly sees clouds on the horizon.

    As to the precious metals and their miners ETFs, more of the same. The primary trend is bullish and the ongoing secondary reaction continues.

    Thus, my analysis of March 24 and March 12, remains valid:


    The Dow Theorist

    Tags: SPY, DIA, IYT, GLD, SLV, GDX, SIL, Dow Theory
    Apr 02 6:02 PM | Link | Comment!
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