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

Tuesday, January 10, 2017

Dow Theory Update for January 10: Trends remain unchanged





However, precious metals could change their secondary trends soon if current rally persists


I am writing before the close, so things might change (especially for stocks) after the close.

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. Here you have an updated chart where you can see that stocks have been meandering. They have failed to make higher highs but at the same time no decline has qualified as a secondary reaction. 

No secondary reaction in sight unless stocks suddenly crash below the last recorded lows


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

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) has re-confirmed the primary bear market on November 14th, 2016.



If the current rally persists for some more 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 more than 1/3 of the current primary bear market swing (measured from the highs of the last completed secondary reaction, which is displayed by blue rectangles). However, the time requirement (let's say three weeks) has not been met by SLV. Here you have an updated chart showing the current rally and the price retracements hitherto achieved.

SLV and GDX are very close to signaling a secondary reaction. Just a little bit more time is needed


GOLD AND SILVER MINERS ETFs

The primary and secondary 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) has re-confirmed the primary bear market on November 13th, 2016

If the current rally persists for some more days and the last recorded highs of January 5th are jointly bettered, SIL and GDX will change their secondary trend to bullish (secondary reaction against the primary bear market). As you can see on the chart bellow, both ETFs have retraced ca. 50% of the current primary bear market swing. 

A little bit more time rallying and higher highs would signal a secondary reaction


Sincerely,
The Dow Theorist




Tuesday, December 20, 2016

Dow Theory Update for December 20: Primary and Secondary trends unchanged





Industrials make higher closing highs unconfirmed

I am on a "vacation mode", and hence my writing will be limited to strictly monitoring trends. No time for in-depth studies.

US STOCKS

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

The Industrials made today a higher closing high unconfirmed by the Transports and SPY. The higher stocks go without starting the first secondary reaction, the more likely losses (if any) arising out from a failed trade are to be contained. Let’s see what happens. 


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

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) has re-confirmed the primary bear market on November 14th, 2016.

For the time being no secondary (bullish) reaction against the primary bear market in sight.

As I write these lines extreme weakness persists.


GOLD AND SILVER MINERS ETFs

The primary and secondary 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) has re-confirmed the primary bear market on November 13th, 2016

For the time being no secondary (bullish) reaction against the primary bear market in sight.

Sincerely,
The Dow Theorist

Friday, December 9, 2016

Dow Theory Update for December 9: US stock indices making confirmed higher highs




Trends unchanged


Gary Antonacci, of the “Dual Momentum” blog, has recently penned an interesting article named “Common Mistakes of Momentum Investors”.  Since the Dow Theory is closely related to appraising momentum and riding on it, the article is quite applicable to Dow Theorist and is an interesting read so that we avoid usual psychological pitfalls.  



US STOCKS

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


Following the primary bull market signal of November 21st, stocks have given little respite to afford a more convenient entry price for latecomers. Almost with no noticeable decline stocks have continued to make confirmed higher highs, which is bullish long term. Stocks are short term overbought and theoretically should pause. However, overbought situations may persist longer than one expects.While we don't know at this stage how will the current bull market signal (and concomitant trade) end, the longer the upward momentum persists, the more likely (while not a certainty) the trade is likely to be closed at a modest loss or even with a profit. The entry price for the SPY (close of November 21st) was 220.15. The SPY closed on December 8th, at 225.15 which amounts to ca. 2.27% advance. If a secondary reaction where to begin from this point, and would further lead to an "average" exit signal which tends to be at ca. -7.7% below the top (more about it here), we would be likely to make a -5.43% loss. Hence, the higher the market goes before undergoing the first secondary reaction, the better. Please mind, that absent a secondary reaction leading to the setup for a primary bear market signal, the closing lows of the last primary bear market (November 4th, 2016 for the SPY at 208.55) are our Dow Theory stop loss (which lies at ca. -5.27% below the entry price of 220.15).

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

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) has re-confirmed the primary bear market on November 14th, 2016.

For the time being no secondary (bullish) reaction against the primary bear market in sight.


GOLD AND SILVER MINERS ETFs

The primary and secondary 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) has re-confirmed the primary bear market on November 13th, 2016

For the time being no secondary (bullish) reaction against the primary bear market in sight.

Sincerely,
The Dow Theorist