Precious metals strong but no change in trends
The value trap
Dorsey Wright’s blog “Systematic Relative Strength” has recently published an interesting article concerning blind value investing, namely buying stocks because they look cheap. The main thesis is that stocks, unlike staples or commodities, don’t have a predetermined value or utility und, thus, what works for consumables (i.e. getting cheap toilet paper) doesn’t necessarily work for assets, which by definition are not to be consumed but to be held for a long time. Cheap apples when held long time can and do turn rotten. So investors beware of blind value investing. Don’t fall into the value trap.
One way to avoid such a value trap is, of course, to be a technical trader.
Stocks
The SPY and Industrials closed up. The Industrials made a higher high on a closing basis whereas the SPY failed to do so. The Transports closed down. According to the Dow Theory, the primary and secondary trend remains bullish.
Today’s volume was higher than yesterday’s. Since it was an up day, it has a bullish connotation. The overall pattern of volume remains bearish.
Gold and silver.
GLD did not either win or lose inventory yesterday.
GLD and SLV closed up. Silver was stronger than gold. The primary and secondary trend remains bearish. I need to see more market action to at least label the secondary trend as bullish as per the Dow Theory. We are still far from that.
GDX and SIL, the gold and silver miners ETFs closed up. The primary and secondary trend remains bearish.
Here you have the figures of the markets I monitor for today:
| Data for April 9, 2013 | |||
| DOW THEORY PRIMARY TREND MONITOR SPY | |||
| SPY | |||
| Bull market started | 11/15/2012 | 135.7 | |
| Bull market signaled | 01/02/2013 | 146.06 | |
| Last close | 04/09/2013 | 156.75 | |
| Current stop level: Bear mkt low | 135.7 | ||
| Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
| 7.32% | 15.51% | 7.63% | |
| DOW THEORY PRIMARY TREND MONITOR GOLD (GLD) | |||
| GLD | |||
| Bull market started | 05/16/2012 | 149.46 | |
| Bull market signaled | 08/22/2012 | 160.54 | |
| Exit December 20 | 12/20/2012 | 161.16 | |
| Current stop level: Sec React low | 11/02/2012 | 162.6 | |
| Realized Loss % | Tot advance since start bull mkt | ||
| 0.39% | 7.83% | ||
| DOW THEORY PRIMARY TREND MONITOR SILVER (SLV) | |||
| SLV | |||
| Bull market started | 06/28/2012 | 25.63 | |
| Bull market signaled | 08/22/2012 | 28.92 | |
| Exit December 20 | 12/20/2012 | 29 | |
| Current stop level: Sec React low | 11/02/2012 | 29.95 | |
| Realized gain % | Tot advance since start bull mkt | ||
| 0.28% | 13.15% | ||
| DOW THEORY PRIMARY TREND MONITOR ETF SIL | |||
| SIL | |||
| Bull market started | 07/24/2012 | 17.08 | |
| Bull market signaled | 09/04/2012 | 21.83 | |
| Exit January 23 | 01/24/2013 | 21.69 | |
| Current stop level: Sec React low | 11/15/2012 | 21.87 | |
| Realized Loss % | Tot advance since start bull mkt | Max Pot Loss % | |
| -0.64% | 26.99% | 27.81% | |
| DOW THEORY PRIMARY TREND MONITOR ETF GDX | |||
| GDX | |||
| Bull market started | 05/16/2012 | 39.56 | |
| Bull market signaled | 09/04/2012 | 47.77 | |
| Exit January 23 | 01/24/2013 | 44.56 | |
| Current stop level: Sec React low | 12/05/2012 | 45.35 | |
| Realized Loss % | Tot advance since start bull mkt | Max Pot Loss % | |
| -6.72% | 12.64% | 20.75% | |
Sincerely,
The Dow Theorist
