Tuesday, March 21, 2017

Dow Theory Update for March 21: Secondary reaction for US stocks NOT signaled today





Trends in precious metals and their miners unchanged too


 US STOCKS

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


On March 1, 2017, the Industrials, Transports and SPY made jointly higher highs. Since then the Industrials, Transports and SPY have declined. The decline has hitherto lasted 14 days. The Industrials and Transports have declined -2.12% and -6.91% respectively. The SPY has declined -2.52%.

Under Schannep’s Dow Theory, at least two indices should decline more than 3% in order to declare the existence of a secondary reaction (extent requirement). Hence, given that only the Transports have declined more than 3%, the extent requirement has not been met.

As far as time is concerned, under Schannep’s Dow Theory, a secondary reaction must last a minimum of 10 calendar days on 2 of the 3 indices with at least 8 trading days as the average of all three indices. The three indices have declined during 14 trading days, and, hence, the time requirement has been met.

Here you have an updated chart.

 
No secondary reaction yet.

All in all, the current pullback does not qualify as a secondary reaction yet

If we adhere to a strict “Rhea/classical” Dow Theory, the time requirement has not been met, as both indices (Industrials and Transports should decline for 3 weeks). We need one more extra day of decline to satisfy the time requirement. Furthermore, as with Schannep’s Dow Theory, the extent requirement has not been met. Thus, according to the “Rhea/classical” Dow Theory no secondary reaction has been signaled yet.


GOLD AND SILVER

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


The secondary trend is bullish (secondary bullish reaction against the primary bear market), as explained here.

As was explained here, SLV and GLD have set up for a primary bull market signal. Please mind that "setup" is not tantamount to the actual signal. If the last recorded primary bear market lows were jointly revisited, the primary bear market would be reconfirmed.

 In the last few days we have seen a confirmed rally. Nonetheless, such rally hasn’t changed the technical picture.

As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action.

GOLD AND SILVER MINERS EFTs

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

The secondary trend is bullish as explained here

As was explained here, SIL and GDX have set up for a primary bull market signal.
 
If the last recorded primary bear market lows were jointly revisited, the primary bear market would be reconfirmed.

 In the last few days we have seen a confirmed rally. Nonetheless, such rally hasn’t changed the technical picture.

As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action.


Sincerely,
The Dow Theorist





Tuesday, March 14, 2017

Dow Theory Update for March 14: No secondary reaction for US stocks yet





Extent requirement not met yet.


 US STOCKS

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

On March 1, 2017, the Industrials, Transports and SPY made jointly higher highs. From this point there’s been a mild decline. The Transports have declined more than 3%. The SPY and Industrials have declined much less than 3%. Hence the extent requirement for a secondary reaction has not been met (at least two indices should confirm). As to the time requirement, the three indices have been declining for 9 trading days, and more than 10 calendar days. Hence, the time requirement has been met. In the very moment, the Industrials or the S&P 500 (SPY) decline more than 3%, we will declare stocks under a secondary (bearish) reaction against the primary bull market.

Under the classical/Rhea Dow Theory we are still far from a secondary reaction as of this writing.

Here you have an updated chart:

As soon as the extent requirement is met, a seconary reaction will be declared



GOLD AND SILVER

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


The secondary trend is bullish (secondary bullish reaction against the primary bear market), as explained here.

As was explained here, SLV and GLD have set up for a primary bull market signal. Please mind that "setup" is not tantamount to the actual signal. If the last recorded primary bear market lows were jointly revisited, the primary bear market would be reconfirmed.


As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action.

GOLD AND SILVER MINERS EFTs

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

The secondary trend is bullish as explained here

As was explained here, SIL and GDX have set up for a primary bull market signal.
 
If the last recorded primary bear market lows were jointly revisited, the primary bear market would be reconfirmed.

 
As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action.


Sincerely,
The Dow Theorist

Wednesday, March 8, 2017

Dow Theory Update for March 8: Gold, Silver and their ETF miners set up for primary bull market signal





Primary and secondary trends unchanged

  

Time remains in short supply, as the health of my mother shows little progress. Nonetheless, I hereby give you an update.
 

 US STOCKS

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

On March 1, 2017, the Industrials, Transports and SPY made jointly higher highs. From this point there’s been a mild decline. The Transports have declined more than 3%.  The SPY and Industrials have declined much less than 3%. Hence the extent requirement for a secondary reaction has not been met (at least two indices should confirm). As to the time requirement, we are very far from its being met, as the decline has been going on for just 5 trading days. All in all, it is too soon to declare the existence of a secondary reaction.

Here you have an updated chart:

 
Since the bull market was signaled (blue arrow left side) no secondary reaction has developped yet. Blue ellipses display current pullback which does not qualify as a secondary reaction yet

In my last post, I cogitated a little bit about the likely losses (or even modest gains) in case the current bull swings would have run its course. You can read such thoughts here



GOLD AND SILVER

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


The secondary trend is bullish (secondary bullish reaction against the primary bear market), as explained here.

For the last few days SLV and GLD have declined, and hence have set up SLV and GLD for  primary bull market signal. Should the secondary reaction closing highs be jointly bettered, a primary bull market would be signaled. The blue horizontal lines on the charts below display the relevant levels to be broken up for a primary bull market signal to be signaled. In the meantime, we observe the markets. 

The blue rectangle (right) displays the secondary reaction. The red rectangle displays the pullbck that sets up silver and gold for a primary bull market


So now there are two possible outcomes:

a) Either, the last recorded primary bear market lows are jointly violated, in which case the primary bear market will be reconfirmed (red horizontal lines)

b) Or the closing highs (blue horizontal lines) are jointly broken up, in which case a primary bull market will be signaled.

 In the meantime, we observe the markets and wait for the verdict.

As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action.

GOLD AND SILVER MINERS EFTs

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

The secondary trend is bullish as explained here

As with precious metals, for the last few days SIL and GDX have declined, and hence have set up SIL and GDX for a primary bull market signal. Should the secondary reaction closing highs be jointly bettered, a primary bull market would be signaled. The blue horizontal lines on the charts below display the relevant levels to be broken up for a primary bull market signal to be signaled. In the meantime, we observe the markets. 

 
The blue rectangle on the right displays the secondary reaction. The red rectangle displays the ongoing pullback which sets up both ETFs for  primary bull market

So now there are two possible outcomes:

a) Either, the last recorded primary bear market lows are jointly violated, in which case the primary bear market will be reconfirmed (red horizontal lines)

b) Or the closing highs (blue horizontal lines) are jointly broken up, in which case a primary bull market will be signaled.

 In the meantime, we observe the markets and wait for the verdict.

As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action.

Sincerely,
The Dow Theorist