Dow Theory Update For January 3: Strebler, Of The Dow Theory Letters, Nails It As To The Power Of Trends
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.
Precious metals strong, but trends unchanged
Jon Strebler, Richard Rusell's associate at the "Dow Theory Letters" has recently nailed it down when he wrote: "Stocks can't continue this [going up] forever¸ but they can do anything they want for longer than you or I think they are irrational"
By the way, I like the way Strebler analyses the market. Furthermore, although sparingly, he uses from time to time the classical Dow Theory. It must be said that Strebler was on the right side of the market during 2013 for both stocks and precious metals.
The SPY closed down, the Industrials and the Transports closed up and failed to break above recent highs.
The primary trend is bullish, as explained here, and more in-depth here.
The primary trend was reconfirmed as bullish on October 17th and November 13th, for the reasons given here and here.
Gold and Silver
SLV and GLD closed up. For the reasons I explained here, and more recently 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.
As to the gold and silver miners ETFs, SIL, and GDX closed down. The primary trend is bearish, as was profusely explained here and here. Likewise, the secondary trend is bearish.
Later today, I will post a review of 2013 according to the Dow Theory. We will revisit all the Dow Theory-based market calls and how we have fared compared to buy and hold. It'll be a real tour de force, as you will have before your eyes one full year of market action.
The Dow Theorist
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.