Dow Theory Update for August 20: The SPY makes higher closing highs unconfirmed

No changes in the gold and silver universe.

Very brief Dow Theory Update today.

The SPY made higher closing highs unconfirmed by the Industrials and Transports. Thus, even though the SPY was able to pierce the last recorded primary bull market closing highs, the lack of confirmation, according to the Dow Theory (be it Schannep’s or Rhea’s) has the following implications:

            a) We cannot declare that the primary bull market has been reconfirmed.

b) The longer it takes for other indices to confirm, the more suspect the current rally will be (and hence the greater the likelihood of a pullback with violation of the secondary reaction lows, and, accordingly, primary bear market signal).

Here you have an updated chart. The pink horizontal lines display the secondary reaction closing lows. Their joint (at least two indices) violation would imply a primary bear market. The blue horizontal lines display the last recorded primary bull market closing highs, which need to be broken out jointly for the primary bull market to be reconfirmed. 

Higher highs unconfirmed are deceptive according to the Dow Theory

 

So another day has passed by with no noteworthy new on the technical (Dow Theory) front.

Sincerely,

The Dow Theorist