And hence, the odds favor the continuance of the primary and secondary trend.
Let’s see what the Dow Theory
has in store for us today.
The SPY, Transports and
Industrials closed up, and thereby made higher closing highs. According to the
Dow Theory confirmed higher highs tend to signal that the current trend remains
in good health. This implies that the odds favor the continuance of the
secondary trend, and by implication of the primary trend (because, for the
primary trend to turn bearish, it is necessary that first the secondary trend
turns bearish –secondary reaction-). While nothing is carved in stone, and we
merely deal with odds, I derive a bullish picture for stocks. Eventually,
trends will change but my Dow Theory readings continue to tell me what they
have been telling me for months: Don’t fight the bullish trend!
The primary trend was
reconfirmed as bullish on October 17th, 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.
Gold and Silver
SLV, and GLD closed down. 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 27th, 2013. From such
highs the market declined without jointly violating the June 27th,
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. However, the secondary bullish reaction against such old primary bear
market is also getting quite old. Tie.
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 down.
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 GDX 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 GDX are not in a
primary bull market.
The primary trend for SIL
and GDX remains, nonetheless, bearish, as was profusely explained here and here.
General note for both GLD/SLV and GDX/SIL: Unless it is a “fake out”, the “coiling” seems to evolve into a breakdown
for the precious metals. If it is a “fake out” precious metals should snap back
into the range soon (since I
have been writing this for three days, “soon” means tomorrow) or else….
More about the “coiling” here and here.
Sincerely,
The Dow Theorist
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