Dow Theory Update for April 9: Stocks extend gains against bearish volume pattern

And trends remain unchanged.

Well, today’s another day where trends (even secondary ones) remain unchanged. The only thing I see on the charts is ominously bearish volume for stocks.

I also see on the charts that China, all the gloom and doom notwithstanding, remains in a primary bull market (I weak one, admittedly). There is an ongoing secondary reaction which hitherto has failed to signal a primary bear market signal. I lack the time for more in-depth explanations (which exist under the Dow Theory) but the chart below gives you a pretty good idea. If all the bad news concerning Chinese defaults, etc. have not managed to flash a primary bear market signal, I wonder what will:

China, in spite of all the negative talk, is not falling out of bed (so say the charts at least)

US Stocks

The SPY, Industrials and Transports closed up on shrinking volume, which has a bearish connotation. The overall pattern of volume is bearish. Look at the chart below: Red arrows (bearish volume days dominate the landscape). 

Bearish volume days continue piling up

The primary trend remains bullish, as explained here, and more in-depth here. 

The primary trend was reconfirmed as bullish on October 17^th, 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

SLV closed down, and GLD closed up. 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 27^th, 2013. From such highs the market declined without jointly violating the June 27^th, 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.

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.

As to the gold and silver miners ETFs, SIL and GDX closed up. I profusely explained that SIL and GDX set up for a primary bull market signal. You can find all the relevant information from a Dow Theory standpoint here.

Please mind that a setup is not the real thing. So the primary trend has not turned bullish yet (or maybe “never”).

The secondary trend is bullish, as explained here. In spite of short term bullish accomplishments, SIL and GLD 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 GLD 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