Wednesday, July 23, 2014

Dow Theory Update for July 22: SIL and GDX have hitherto refused to signal a primary bull market




Trends remain unchanged for stocks, gold, silver and their miners.


My time remains in short supply. However, there is no need for a daily update, as the markets do not deign to change their trends, not even secondary ones.

US Stocks.

The dreaded (and thousand times wrongly anticipated by many) secondary reaction stubbornly refuses to materialize, as stocks continue flirting with higher closing highs.

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


Gold and silver (GLD and SLV) are still far from signaling a primary bull market signal .Thus, if volatility remains normal, any new primary bull market signal (which implies bettering the secondary reaction highs) is not in sight.

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 1 and ½ year elapsed since the bear market signal was flashed. However, I am extremely skeptical as to the predictive power of statistics. Each bull and bear market have their own idiosyncrasy and hence past durations do not necessarily help us time a change of trend. 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 and price compression.

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.

Gold and Silver miners ETFs (GDX and SIL)

On July 11th, I alerted the followers of this Dow Theory blog that SIL and GDX were close to signaling a primary bull market. Go to the relevant post and chart here.


However, hitherto SIL and GDX (while flirting intraday with a primary bull market signal, as the secondary reaction closing highs were momentarily exceeded, but closing below such secondary reaction closing highs) have refused to signal a primary bull market and have modestly retreated from recent highs.  Look at the chart below and you will see that the blue horizontal lines (the secondary reaction closing highs) remain untouched.

Will a primary bull market be signaled? the blue horizontal lines will let us know
 
The junior gold miners (GDXJ) remain strong and the GDXJ/GDX ratio is near its most recent highs which tends to signal underlying strength for the gold miners (which increases the odds for a final breakout and primary bull market signal). However, we must remain patient and disciplined.


So we still have to wait and see….

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.


Sincerely,
The Dow Theorist







Wednesday, July 16, 2014

Dow Theory Update for July 15: Primary and secondary trends unchanged

In spite of recent declines in stocks, gold and silver and their respective miners ETFs, trends remain unchanged. 


Here you can find my in-depth assessment of the current situation.

http://www.dowtheoryinvestment.com/2014/07/dow-theory-update-for-july-11-primary.html

Sincerely,
The Dow Theorist

Friday, July 11, 2014

Dow Theory Update for July 11: Primary Trend could turn bullish soon for gold and silver miners





Trends for Stocks remain unchanged


This is going to be a chaotic Dow Theory update, as time remains in short supply. It is likely that during next week I will not be able to post, even though I will try to alert you, if I see that trends have changed.

Furthermore, I will not stick to the usual format, since I am writing some hours before the close.

US stocks.

In spite of declining prices for the last few days, it is still too early to declare the existence of a secondary reaction. Neither the time requirement, nor the extent requirement for the existence of a secondary reaction has been met yet.

Of course, if the secondary trend has not changed, and remains bullish, with more reason the primary trend remains bullish too, 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

Gold and silver (GLD and SLV) are still far from signaling a primary bull market signal (unless they stage a powerful rally). Thus, if volatility remains normal, any new primary bull market signal (which implies bettering the secondary reaction highs) is not in sight.

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.


Gold and Silver miners ETFs (GDX and SIL)


As followers of this Dow Theory blog know, the secondary trend is bullish (within a primary bear market). SIL and GDX are very close to bettering the last recorded secondary reaction closing highs, which would display a primary bull market signal.

Here you have a chart that spares me words:


 
Keep your eyes glued to the blue horizontal line: if exceeded by both ETFs a primary bull market will be signaled

If both EFTs manage to break above the blue lines (secondary reaction highs) a primary bull market will be signaled. As you can see the primary bull market signal is within striking distance. Since it is likely than in the next few days, I will not be able to be glued to a screen, please monitor by yourself the action of these two ETFs. A primary bull market signal would be bullish, not only for the miners, but, indirectly for the precious metals themselves.

I also see remarkable strength in GDXJ, the junior gold miners ETFs, as of this writing, GDXJ is flirting with higher (intermediate) highs, whereas the GDXJ/GDX ratio is also attempting to make a higher (intermediate) high. All in all, the junior are confirming the overall strength of the miners. Here you have a chart:

GDXJ's strength tends to favor GDX. More tailwind for the nearing primary bull market signal?

 

Bottom line: The junior gold miners are strong (medium term), and confirm SIL and GDX strength (medium term). If a primary bull market signal is signaled by the miners, GLD and SLV should gather strength and confirm soon (by signaling their own primary bull market) or else we could be witnessing a false breakout (namely “fakeout”).

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.


Sincerely,
The Dow Theorist