Markets on the Edge: A Deep Dive with Andrew Horowitz & Manuel Blay

 

In our latest conversation, Andrew and I unpacked the recent market rollercoaster—driven by self-inflicted uncertainty and erratic swings. I shared insights drawn from Dow Theory, the recent S&P 500 decline, and what truly defines a valid rally.

We also delved into the concept of capitulation, assessed the impact of today’s economic backdrop, and discussed how my timing indicators are guiding us through this volatile environment.

🎧 Listen to the full podcast here:thedisciplinedinvestor.com/blog/2025/04/13/tdi-podcast-urgent-market-signals-916

 Sincerely,

Manuel Blay

Editor of thedowtheory.com

Dow Theory Signals a New Bull Market in Bonds — Is It Predicting Lower Inflation or a Recession?

 

Overview:
On April 4, 2025, following a strong rally driven by lower interest rates, the Dow Theory signaled the start of a new bull market in U.S. bonds. The key question now: What is the market anticipating? Is it pricing in lower inflation amid a soft landing—or something more concerning, like a recession-induced drop in inflation?

As a reminder, the 3-month/10-year yield curve is inverted. While not a definitive predictor, an inverted yield curve has historically served as a reliable warning sign of upcoming recessions.

General Remarks:

In this post, I extensively elaborate on the rationale behind employing two alternative definitions to evaluate secondary reactions.

TLT refers to the iShares 20+ Year Treasury Bond ETF. You can find more information about it here

IEF refers to the iShares 7-10 Year Treasury Bond ETF. You can find more information about it here.

TLT tracks longer-term US bonds, while IEF tracks intermediate-term US bonds. A bull market in bonds signifies lower interest rates, whereas a bear market in bonds indicates higher interest rates.

A) Market situation if one appraises secondary reactions not bound by the three weeks and 1/3 retracement dogma 

The primary trend shifted to bullish on 4/4/25 when TLT surpassed its 3/3/25 closing high, and confirmed IEF which had broken up on 4/1/25.

You may read more about the setup that preceded the new primary bull market signal in my 3/26/25 post.

The table below displays the price action that led to the new bull market signal.

So, now the primary and secondary trends are bullish.

The charts below depict the current market situation. The grey rectangles on the left show a drop that occurred in February that did not have enough extent to set up TLT  and IEF for a potential bull market signal. The blue rectangles (Step #2) highlight the current secondary (bullish) reaction against the primary bear market. The brown rectangles show the most recent pullback that set up both ETFs for a potential primary bull market signal. The blue horizontal lines highlight the bounce highs (step #2), whose breakup signaled the new bull market. The red horizontal lines highlight the Bear market lows (Step #3) whose breakdown would signal a new primary bear market.

 

B) Market situation if one sticks to the traditional interpretation demanding more than three weeks and 1/3 confirmed retracement to declare a secondary reaction.

In this instance, the trend assessment using the “long-term” Dow Theory aligns with the “short-term” version. Therefore, my earlier explanation is applicable here. The primary trend is now bullish, as well as the secondary one.

Sincerely,

Manuel Blay

Editor of thedowtheory.com

 

 

Setup for a potential primary bull market signal on TLT and IEF completed on 3/26/25

 

Overview: It appears that all markets are anticipating a new wave of liquidity is about to be released. Gold, stocks, and crypto are edging higher. Notably, even bonds, which have been mired in a bear market, have experienced a rally. To be clear: The “setup” is for a potential primary bull market signal. It is NOT the actual bull market signal. In my April 1st Letter to Subscribers, I will further elaborate on liquidity.

General Remarks:

In this post, I extensively elaborate on the rationale behind employing two alternative definitions to evaluate secondary reactions.

TLT refers to the iShares 20+ Year Treasury Bond ETF. You can find more information about it here

IEF refers to the iShares 7-10 Year Treasury Bond ETF. You can find more information about it here.

TLT tracks longer-term US bonds, while IEF tracks intermediate-term US bonds. A bull market in bonds signifies lower interest rates, whereas a bear market in bonds indicates higher interest rates.

A) Market situation if one appraises secondary reactions not bound by the three weeks and 1/3 retracement dogma 

As I explained in this post, the trend was signaled as bearish on 12/18/24.

In this post, I explained the development of a secondary (bullish) reaction against the bear market.

This rally stopped on 3/3/25, and a pullback followed that lasted >=2 days and exceeded the Volatility-Adjusted Minimum Movement (more about the VAMM HERE) on at least one ETF to set up TLT and IEFfor a potential primary bull market signal. We don’t require confirmation when dealing with this kind of “setting up” pullback, as I explained in depth HERE.  Such a pullback set up both ETFs for a potential primary bull market signal. The Table below displays the relevant dates and prices:

Therefore, now we have the following options:

1. A primary bull market will be signaled if TLT and IEF jointly surpass their 3/3/25 closing highs (Step #2 in the above table) at 92.57 (TLT) and 95.39 (IEF).
2. If TLT and IEF continue to decline and jointly break below their 1/14/25 (TLT) and 1/13/25 (IEF) bear market lows, the primary bull market setup will be canceled, the secondary reaction will be terminated, and the primary bear market will be reaffirmed.

The charts below illustrate the latest price movements. The blue rectangles indicate the ongoing (bullish) secondary reaction amidst the prevailing primary bear market. The brown rectangles mark the present retracement. The blue horizontal lines denote the peak levels of the secondary reaction (Step #2), a breach of which would signal the start of a new primary bull market, while the red horizontal lines highlight the troughs of the bear market (Step #1), a violation of which would reinforce the bearish trend. The gray triangles display a pullback that lacked enough extent to set up TLT and IEF for a bull market signal. 

B) Market situation if one sticks to the traditional interpretation demanding at least three weeks of movement to declare a secondary reaction. 

As I explained in this post,  the trend was signaled as bearish on 12/18/24.

In this instance, the trend assessment using the “long-term” Dow Theory aligns with the “short-term” version. Thus, my earlier explanation applies here. The primary trend remains bearish, the secondary one is bullish, with the setup for a potential primary bull market now complete.

Sincerely,

Manuel Blay

Editor of thedowtheory.com

 

 

Free Webinar: Applying The Dow Theory To Assess Market Trends

 

Secure your place NOW

I’m honored to be joining renowned trader and analyst Dean Christians, CMT Christians of SentimenTrader.com for a special public webinar on March 26th, 2025, from 11:00 a.m. to 12:00 p.m. ET.
In today’s turbulent market environment, this event promises to be a must-attend. It will offer a deep dive into sentiment, strategy, and actionable insights—a true tour de force.
Registration is free, and you can learn more or secure your spot by clicking the link below:

https://sentimentrader.com/st-zoom-webinar-current

Sincerely,

Manuel Blay

Editor of thedowtheory.com

Bull market for the gold and silver miners ETFs (GDX & SIL) signaled on 3/13/25

 

Overview: While most stocks are amid a severe correction, the gold and silver miners’ ETFs have shown remarkable strength, which, in my opinion, is proof that precious metals are poised for a big and sustainable run-up.

The trend for gold and silver is also bullish.

General Remarks:

In this post, I extensively elaborate on the rationale behind employing two alternative definitions to evaluate secondary reactions.

SIL refers to the Silver Miners ETF. More information about SIL can be found HERE.

GDX refers to the Gold Miners ETF. More information about GDX can be found HERE.

A) Market situation if one appraises secondary reactions not bound by the three weeks and 1/3 retracement dogma.  

As I explained in this post, the trend was signaled as bearish on 12/18/24.

As I explained here, a secondary (bullish) reaction against the bear market was signaled on 1/30/25.

And in this post, I explained that the setup for a potential primary bull market signal had been completed.

The table below contains the key prices and dates:

The chart below illustrates the latest price movements. The blue rectangles indicate the secondary reaction (Step #2). The brown rectangles mark the pullback (Step #3) that set up SIL and GDX for a potential primary bull market signal. The blue lines highlight the secondary reaction highs whose breakup signaled a new bull market. 

 

 So, now the primary and secondary trends are bullish.

B) Market situation if one sticks to the traditional interpretation demanding more than three weeks and 1/3 confirmed retracement to declare a secondary reaction.

As I explained in this post, the trend was signaled as bearish on 12/18/24.

In this instance, the long-term application of the Dow Theory coincides with the shorter-term version, so there was a secondary reaction against the primary bear market and higher highs signaled a new bull market

So, now the primary and secondary trends are bullish.

Sincerely,

Manuel Blay

Editor of thedowtheory.com