Tuesday, February 21, 2017

Dow Theory Update for February 21: Stocks continue making higher highs




When will the winning streak end?


I apologize for not having posted that much. I have been (and still “am”) extremely short of time due to my mother’s illness.

In any instance, primary trends have not changed during my days of absence.


US STOCKS


The primary and secondary trend is bullish since November 21st, 2016, as explained here and here.

On February 15, the Industrials, Transports and SPY (SP 500) jointly made higher highs. Today, the SPY and the Industrials jointly made higher highs. Ergo, both the primary and secondary trend remains bullish.

Here you have an updated chart. It is worth mentioning that since November 21st, 2016 (date of the primary bull market signal) three months have elapsed and hitherto no hint of a secondary reaction is to be seen on the charts. 

No seconary reaction in sight
 

GOLD AND SILVER

The primary trend is bearish, as was explained here and here. The primary bear market was signaled on September 30rd, 2016.


In my last post I wrote that SLV needed to better its last recorded closing highs of Jan 23 so that the time requirement for the secondary reaction is met. Well SLV has amply bettered such highs, and hence, given that GLD long time ago met the time requirement for a secondary reaction, we can declare that the secondary trend for SLV and GLD has changed to bullish (secondary reaction against the primary bear market).


If no pullback (at the very least exceeding 3% or more depending on volatility) developed, a primary bull market would be signaled when the closing highs of the last completed secondary reaction (highlighted with red horizontal lines) get jointly violated by both SLV and GLD. Below an updated chart. The blue rectangles display the ongoing secondary reaction. This is the “famous” alternative primary bull (and bear) market signal which Rhea explains on page 77 of his book “The Dow Theory”. More about it here

Strong seconary reaction. Hitherto no pullback hs set up SLV and GLD for the "usual" Dow Theory signal



GOLD AND SILVER MINERS EFTs

The primary trend is bearish, as was explained here and here.

The secondary trend is bullish as explained here

The current decline could be setting up SIL and GDX for a primary bull market signal. I write “could” since I don’t have the time to measure percentagewise the current pullback. The time requirement for the pullback which sets up stocks for the primary bull market signal has been amply met.

GDX has exceeded the closing highs of the last completed secondary reaction on February 6th, 2017. However, SIL has not confirmed, and hence based on Rhea’s alternative bull market signal, we cannot yet declare the primary trend as bullish.

Here you have an updated chart. The red horizontal lines display the closing highs of the last completed secondary reaction. The blue rectangles display the ongoing secondary reaction. 

 
If SIL exceeded the red horizontal line, a primary bull market would be signaled


Sincerely,
The Dow Theorist




Thursday, January 26, 2017

Dow Theory Update for January 26: US stocks “in the clear” by making new confirmed higher highs





Hence, the “clock” for appraising a secondary reaction is set to zero.


I don’t have much time to write, since my mother is in hospital and I am taking care of her.

US STOCKS


The primary and secondary trend is bullish since November 21st, 2016, as explained here and here.

I see on the charts that yesterday (Jan 25) the SPY (and the SP 500) and the Industrials made higher closing highs. Today the Transports did the same. In other words, the previous closing highs of Dec 13 (for the SPY), Dec 20 (for the Industrials) and December 8 (for the Transports) have been jointly broken out.

Hence, since the primary bull market signal of November 21st, 2016 no secondary reaction has developed. Higher confirmed highs means that any secondary reaction is to be counted from the last recorded highs.

All in all, the primary and secondary trend was, is, remains and has been reconfirmed bullish.  

GOLD AND SILVER

The primary and secondary trend is bearish, as was explained here and here. The primary bear market was signaled on September 30rd, 2016.

In my last post I was hesitant as to declaring the existence of a secondary reaction (I needed one more day of rally for SLV, something which has not occurred). Thus, SLV needs to better its   last recorded closing highs of Jan 23 so that the time requirement for the secondary reaction is met.

GOLD AND SILVER MINERS EFTs

The primary trend is bearish, as was explained here and here.

The secondary trend is bullish as explained here

The current decline could be setting up SIL and GDX for a primary bull market signal. I write “could” since I don’t have the time to measure percentagewise the current pullback. The time requirement for the pullback which sets up stocks for the primary bull market signal has been met (2 days for GDX and 3 days for SIL).

Sincerely,
The Dow Theorist

Tuesday, January 17, 2017

Dow Theory Update for January 17: Silver and Gold miners ETFs under secondary (bullish) reaction





Trends for stocks unchanged


US STOCKS

The primary and secondary trend is bullish since November 21st, 2016, as explained here and here.

The Industrials made on December 20th, 2016 a higher closing high unconfirmed by the Transports and SPY. Furthermore, since that date, the Industrials have been unable to make higher highs.

No secondary (bearish) reaction against the current primary bull market is in sight on the charts in spite of today's declines.

GOLD AND SILVER

The primary and secondary?? trend is bearish, as was explained here and here. The primary bear market was signaled on September 30rd, 2016. Depending on the way one appraises secondary reactions (time requirement) one could even say that the secondary trend has turned bullish (more below).

After what can be considered a secondary (bullish) reaction against the primary bear market (the rally retraced more than 1/3 of the previous decline on a confirmed basis), newer lows (breaking down below the last recorded primary bear market closing lows)  re-confirmed the primary bear market on November 14th, 2016.


If the current rally persists for just one more day for SLV (which is tantamount to 15 trading days), gold and silver will change their secondary trend to bullish (secondary reaction against the primary bear market). If we apply the classical Dow Theory, GLD and SLV have retraced CA. 50% of the current primary bear market swing (measured from the highs of the last completed secondary reaction, which is displayed by blue rectangles on the left side). However, the time requirement (let's say three weeks) has not been met by SLV.

I consider three weeks of rallying  (December 23rd for SLV and December 15th for GLD) coupled with an advance off the lows which has retraced 50% of the current primary bear market swing (which is to be counted from the closing highs of the last recorded secondary reaction, that is November 2nd for SLV and November 4th for GLD) enough time and enough retracement under the Rhea/classical Dow Theory for a secondary reaction to exist. Just one more day of rallying for SLV would make me even more sure about the existence of the secondary reaction.

Given the generous price advance off the primary bear market closing lows, I feel it is not necessary to perform volatility adjustments in order to confirm the existence of a secondary reaction. SLV has advanced +9.18% and GDX has advanced +7.92%. Both price advances more than double the 3% minimum threshold for stock indices.

Here you have an updated chart. 

Secondary reaction in sight? Or are we already under a secondary reaction?


GOLD AND SILVER MINERS ETFs

The primary trend is bearish, as was explained here and here.

After what can be considered a secondary (bullish) reaction against the primary bear market (the rally retraced almost 1/3 of the previous decline on a confirmed basis), newer lows (breaking down below the last recorded primary bear market closing lows)  re-confirmed the primary bear market on November 13th, 2016

Today, we can declare SIL and GDX under a secondary (bullish) reaction against the primary bear market.

SIL has rallied for 15 trading days (closing lows made on December 22nd). GDX has rallied for 20 days (closing lows made on December 15th). SIL has rallied +21.85% and GDX has rallied + 23.01%.

Furthermore, both SIL and GDX have retraced ca. 60% of the current primary bear market swing.

While given the generous amount of time and retracement involved it is not necessary to perform volatility adjustments (more about them here and here) in order to declare the existence of the secondary reaction. However, just for the sake of curiosity I did the calculations and found that both SIL and GDX have exceeded the minimum volatility adjusted movement (which stands at 21.37% for SIL and 16.7% for GDX, based on a 30 trading days volatility reading versus the SPY)


All in all, the secondary trend has changed from bearish to bullish for SIL and GDX. Please mind that the primary trend has not changed and remains bearish.

For a primary bull market to be signaled either the closing highs of the last completed secondary reaction are jointly violated (November 9th for SIL and November 3rd for GDX) or there is a confirmed pullback followed by a rally that breaks up the current secondary reaction closing highs. So we will watch together these market and see what happens.

Here you have an updated chart

A clear text-book like secondary reaction against the primary bear market


Sincerely,
The Dow Theorist