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Dow Theory Update For July 17: Precious Metals Weak

Jul. 17, 2013 4:43 PM ETSPY, DIA, IYT, GLD, SLV, GDX, SIL
Manuel Blay profile picture
Manuel Blay's Blog
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Seeking Alpha Analyst Since 2012

Co-Editor of the top-ranked investment  Letter  thedowtheory.com

Investor and Trader As an investor I'm deeply influenced by Dow Theory, especially by the book "The Dow Theory for the 21st Century". I focus on the primary trend (1-2 years). My trading is short-term based (avg trade duration 4-5 days).

In addition to US stock indexes, I have successfully expanded the application of the Dow Theory to precious metals, their miners, and US interest rates. The Dow Theory is a more accurate timing device that moving averages, breakout systems, etc.

Primary trend of stocks continues bearish

Let's begin with our Dow Theory commentary for today.


The SPY, Transports, and Industrials closed up. As explained here, the Transports have failed to confirm for 5 consecutive days the higher closing highs made by the Industrials and the SPY . Therefore, no primary bull market has been signaled yet.

The primary trend is bearish for the reasons explained here, and further explained here.

The secondary trend is bullish, as has been explained here.

Today's volume was higher than yesterday's, which is bullish, as higher prices were supported by expanding volume. However, the overall pattern of volume remains bearish as:

1. There are more red arrows (bearish volume days) than blue arrows (bullish volume days), as you can see from the chart below.

2. Volume clearly recedes when prices stage a rally lasting some days (declining trend lines).

On the plus side, we have to note that five trading days ago, we had a bullish pivot (highlighted with an ellipse), as was explained here.

Here you have an updated chart:



Volume remains bearish

Gold and Silver

SLV and GLD closed down. The primary trend is bearish, as explained here and reconfirmed bearish here. Furthermore, the secondary trend remains bearish too.

GDX and SIL, the gold and silver miners ETFs closed down. The primary trend is bearish, as explained here and reconfirmed bearish here.

The secondary trend for GDX and SIL is bullish, as explained here.


The Dow Theorist

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