Industrials and SPY still caught within the line.
What’s the current condition of the stock market?
On October 3, this Dow Theory blog alerted about the formation of a “line” which is relevant under Dow Theory. Please re-read my post in this blog “Stock markets forming a „line’: What does it mean under Dow Theory?” which you can find here to be more acquainted with its implications for investors.
Well, after five trading days, I can only say the “line” continues in good health. The Industrials briefly broke through the line on 10/05/2012. Such movement, though, was not confirmed by either the Transports or the SPY and hence, being unconfirmed, we could not derive any bullish implication. Furthermore, since such breakout continues unconfirmed after three trading days, it can be an indication of an impending secondary reaction.
Here you have an updated chart displaying the “line” (blue rectangles in the Industrials -on top- and the SPY -at the bottom-):
 |
| The Industrials and the SPY forming a line. |
As you can read in the chart, the Industrials have been caught in a 1.47% trading range and the SPY in a 2.76% one. So we are witnessing a very tight formation. Big accumulation or distribution is taking place. However, as you can see from the meager percentages, we are far from being in a “bear” market, or even a secondary reaction.
This spreadsheet may help you visualize the main figures and dates of this “line”:
| Date | SPY | Date | INDUSTRIALS | |
| High point | 09/14/2012 | 147.24 | 10/05/2012 | 13610.15 |
| Low point | 09/26/2012 | 143.29 | 09/26/2012 | 13413.51 |
| % from high to low | 2.76% | 1.47% |
Today was a bearish volume day. Stocks were clearly down on higher volume.
As to gold, silver and their miners all of them closed down. However, no technical damage has been made and we cannot even boast a minor secondary reaction.
The BLV/GLD ratio (long term bond/gold) ratio still at a difficult juncture refuses to break down.
So another day to focus on the big picture: The primary bull movement remains in force until contradicted by a new bear market signal. Until now we are very far from such a signal since we haven’t even seen a secondary reaction.
Here you have the figures for today:
| Data for October 9, 2012 | |||
| DOW THEORY PRIMARY TREND MONITOR SPY | |||
| SPY | |||
| Bull market started | 06/04/2012 | 128.1 | |
| Bull market signaled | 06/29/2012 | 136.1 | |
| Last close | 10/09/2012 | 144.2 | |
| Current stop level: Bear mkt low | 128.1 | ||
| Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
| 5.95% | 12.57% | 6.25% | |
| DOW THEORY PRIMARY TREND MONITOR GOLD (GLD) | |||
| GLD | |||
| Bull market started | 05/16/2012 | 149.46 | |
| Bull market signaled | 08/22/2012 | 160.54 | |
| Last close | 10/09/2012 | 170.99 | |
| Current stop level: Bear mkt low | 149.46 | ||
| Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
| 6.51% | 14.41% | 7.41% | |
| DOW THEORY PRIMARY TREND MONITOR SILVER (SLV) | |||
| SLV | |||
| Bull market started | 06/28/2012 | 25.63 | |
| Bull market signaled | 08/22/2012 | 28.92 | |
| Last close | 10/09/2012 | 32.83 | |
| Current stop level: Bear mkt low | 25.63 | ||
| Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
| 13.52% | 28.09% | 12.84% | |
| DOW THEORY PRIMARY TREND MONITOR ETF SIL | |||
| SIL | |||
| Bull market started | 07/24/2012 | 17.08 | |
| Bull market signaled | 09/04/2012 | 21.83 | |
| Last close | 10/09/2012 | 24.45 | |
| Current stop level: Bear mkt low | 17.08 | ||
| Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
| 12.00% | 43.15% | 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 | |
| Last close | 10/09/2012 | 52.08 | |
| Current stop level: Bear mkt low | 39.56 | ||
| Unrlzd gain % | Tot advance since start bull mkt | Max Pot Loss % | |
| 9.02% | 31.65% | 20.75% | |
Sincerely,
The Dow Theorist.
