Monday, September 16, 2019

Dow Theory Update for September 16: US Stocks close to signaling primary bull market


Trends for precious metals unchanged


First of all, I apologize for not having written since August 30. I still owe two posts: One concerning the analysis of the last primary bull market signal, and one concerning the next issue of the capitulation saga. Time has been in extremely short supply in the last few weeks. Other endeavors consume my time.

This post will merely update about the current market situation.

US STOCKS

A primary bear market for US stocks was signaled on August 14th, 2019 as explained here.

A secondary reaction against the primary bear market was signaled on August 30, as explained here.


From that date, the Industrials, the Transports and the S&P 500 have rallied. No 3% pullback on at least one index has occurred, and hence the setup for the ordinary primary bull market signal has not been completed.

Nonetheless, if all three indices broke up above the last recorded primary bull market closing highs, a primary bull market would be signaled. For the time being, only the Transports have done so unconfirmed. This one unusual, albeit fully Dow Theory-compliant alternative primary bull market signal. As a reminder, there are three alternative ways under the Dow Theory to signal either a bull or bear market. More about such three alternative signals in this post:


Here you have an updated chart:

In spite of the current rally, the primary trend remains bearish


GOLD AND SILVER


The primary trend is bullish since 12/24/2018 as explained here. No changes. We finally got a secondary reaction on 4/16/2019 when GLD violated its 03/07/2019 closing lows (and confirmed SLV which had done so some days ago). More about the entrails of such a secondary reaction here and here.

On June 18th, 2019 GLD managed to break up above the closing highs of the primary bull market unconfirmed by SLV. Hence, at that time we could not declare the end of the secondary reaction. However, on 07/18/2019 SLV broke up above its hitherto primary bull market highs, and hence the primary bull market has been reconfirmed. From that date both GLD and SLV have made further higher highs. A bull market.

Gold and silver have declined for the last few days. However, the time requirement has not been met yet. Since the time requirement has not been met, I have not bothered with measuring the extent requirement, as we need both to declare the existence of a secondary reaction.


GOLD AND SILVER MINERS ETFs


The primary trend is bullish since 12/18/2018 as explained here. No changes. 

On June 17th, 2019 GDX managed to break up above the closing highs of the primary bull market unconfirmed by SIL. Hence, we could not declare the end of the secondary reaction. However, on 07/17/2019 SIL broke up above its hitherto recorded primary bull market highs, and the primary bull market was reconfirmed. Since that date both ETFs have been making higher highs. A bull market.

GDX and SIL have declined for the last few days. However, the time requirement has not been met yet. Since the time requirement has not been met, I have not bothered with measuring the extent requirement, as we need both to declare the existence of a secondary reaction.


Sincerely,
The Dow Theorist

Friday, August 30, 2019

Dow Theory Update for August 30:Secondary reaction for US stocks signaled today




Trends for Gold, silver and their ETFs miners unchanged


US STOCKS

A primary bear market for US stocks was signaled on August 14th, 2019 as explained here.

The Industrials and S&P 500 stopped their decline on that very day. The Transports further declined until 08/27/2019. From these dates all indeces have rallied making higher highs (since the primary bear market lows) today. Hence, the Industrials and the S&P 500 have been rallying for 12 trading days and the Transports has been rallying for 3 trading days. Thus, the average time of this rally has been: 12+12+3 = 27/ 3 (indices) = 9 trading days.

Furthermore, two indices (the Industrials and the Transports) have been rallying more than 10 calendar days. Hence, the time requirement for the existence of a secondary reaction according to Schannep’s Dow Theory has been met.

As to the extent requirement, all three indices have rallied more than 3% and hence, given that the rally has been confirmed, the extent requirement has been met. The spreadsheet below tells the whole story:



Hence, no sooner has the primary bear market been signaled we are confronted with the first secondary reaction.

The charts below display the current situation. The blue rectangles on the right side of the charts display the ongoing secondary reaction. 

Stocks under a new secondary (bullish) reaction against primary bear market


As to the Rhea/Classical Dow Theory, the primary trend remains bullish whereas we remain in the midst of a secondary (bearish) reaction against that primary bullish trend. The Industrials made higher closing highs bettering their secondary reaction highs unconfirmed by the Transports and, hence, the primary bull market was not reconfirmed and the secondary reaction was not extinguished. On August 23rd, 2019 the Transports violated their secondary reaction closing lows unconfirmed by the Industrials, and accordingly no primary bear market has been signaled. So the trend of the stocks when appraised under the Classical Dow Theory remains bullish but inconclusive. Lack of confirmation by the Transports prevented both the reconfirming of the primary bull market and the signaling of a primary bear market.

The charts below display the current situation under the “Rhea/Classical” Dow Theory

 
In spite of everything the primary bull market remains bullish as per the Rhea/Classical Dow Theory
Next week I hope to write a post mortem assessment of the last primary bull market. Was it a winner? By how much? Did capitulation improve our timing? More on these aspects soon. Thereafter, a new chapter of the "capitulation" saga should follow.

GOLD AND SILVER


The primary trend is bullish since 12/24/2018 as explained here. No changes. We finally got a secondary reaction on 4/16/2019 when GLD violated its 03/07/2019 closing lows (and confirmed SLV which had done so some days ago). More about the entrails of such a secondary reaction here and here.

On June 18th, 2019 GLD managed to break up above the closing highs of the primary bull market unconfirmed by SLV. Hence, at that time we could not declare the end of the secondary reaction. However, on 07/18/2019 SLV broke up above its hitherto primary bull market highs, and hence the primary bull market has been reconfirmed. From that date both GLD and SLV have made further higher highs. A bull market.


GOLD AND SILVER MINERS ETFs


The primary trend is bullish since 12/18/2018 as explained here. No changes. 

On June 17th, 2019 GDX managed to break up above the closing highs of the primary bull market unconfirmed by SIL. Hence, we could not declare the end of the secondary reaction. However, on 07/17/2019 SIL broke up above its hitherto recorded primary bull market highs, and the primary bull market was reconfirmed. Since that date both ETFs have been making higher highs. A bull market. 

Sincerely,
The Dow Theorist