Dow Theory Update For August 21: Secondary Correction For Stocks Continues Unabated

Aug. 21, 2013 4:54 PM ETSPY, DIA, IYT, GLD, SLV, GDX, SIL
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Contributor 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.

Precious metals consolidating

Let's get started with our Dow Theory commentary for today.

Stocks

The SPY, Industrials, and Transports closed down.

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

The secondary is bearish, which implies an ongoing secondary reaction against the primary bullish trend, as explained here.

Today's volume was higher than Tuesday's. Since stocks closed down, expanding volume has a bearish connotation, as lower prices were not confirmed by volume. For the reasons I gave here, I'd say that volume is bullish. Furthermore, the last breakup of 08/01 was a bullish pivot, as was explained here.

Gold and Silver

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

GDX and SIL closed DOWN, and, unlike GLD and SLV, are unambiguously in a primary bull market under the Dow Theory, as explained here and here. The secondary trend is bullish as well.

Sincerely,

The Dow Theorist

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