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Dow Theory Update For June 2: Industrials, Transports And SPY Make Higher Closing Highs

|Includes: DIA, GDX, GLD, IYT, SIL, SLV, SPDR S&P 500 Trust ETF (SPY)

And hence, the odds favor the continuance of the primary and secondary trend.

Let's see what the Dow Theory has in store for us today.

US Stocks

The SPY, Transports and Industrials closed up, and thereby made higher closing highs. According to the Dow Theory confirmed higher highs tend to signal that the current trend remains in good health. This implies that the odds favor the continuance of the secondary trend, and by implication of the primary trend (because, for the primary trend to turn bearish, it is necessary that first the secondary trend turns bearish -secondary reaction-). While nothing is carved in stone, and we merely deal with odds, I derive a bullish picture for stocks. Eventually, trends will change but my Dow Theory readings continue to tell me what they have been telling me for months: Don't fight the bullish trend!

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

The primary trend was reconfirmed as bullish on October 17th, 2013, and November 13th, 2013 and March 7th, 2014, for the reasons given here, here and here.

So the current primary bull market signal has survived three secondary reactions.

The secondary trend is bullish too, as explained here and here.

Gold and Silver

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

For the primary trend to turn bullish, SLV and GLD should jointly break above the secondary (bullish) reaction highs. As a reminder, the secondary reaction closing highs were made on August 27th, 2013. From such highs the market declined without jointly violating the June 27th, 2013 primary bear market lows.

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.

On a statistical basis the primary bear market for GLD and SLV is getting old. More than one year since the bear market signal was flashed has elapsed. 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. However, the secondary bullish reaction against such old primary bear market is also getting quite old. Tie.

Furthermore, the June 27, 2013 lows remain untouched. The longer this situation lasts, the higher the odds that something might be changing. But I wait for the verdict of price action.

As to the gold and silver miners ETFs, SIL, and GDX closed down.

I profusely explained that SIL and GDX set up for a primary bull market signal. You can find all the relevant information from a Dow Theory standpoint here.

Please mind that a setup is not the real thing. So the primary trend has not turned bullish yet (or maybe "never").

The secondary trend is bullish, as explained here. In spite of short term bullish accomplishments, SIL and GDX are not in a primary bull market.

The primary trend for SIL and GDX remains, nonetheless, bearish, as was profusely explained here and here.

The secondary trend is bullish, as explained here. In spite of short term bullish accomplishments, SIL and GDX are not in a primary bull market.

The primary trend for SIL and GDX remains, nonetheless, bearish, as was profusely explained here and here.

General note for both GLD/SLV and GDX/SIL: Unless it is a "fake out", the "coiling" seems to evolve into a breakdown for the precious metals. If it is a "fake out" precious metals should snap back into the range soon (since I have been writing this for three days, "soon" means tomorrow) or elseā€¦. More about the "coiling" here and here.

Sincerely,

The Dow Theorist