Wednesday, September 17, 2014

Dow Theory Update for September 17: The Industrials finally bettered their last recorded highs

Precious metals weak and no trends changed

US Stocks

The SPY, Industrials, and Transports closed up. The Industrials finally broke above their last recorded primary bull market closing highs (July 16th). Even though, as per my own Dow Theory “flavor," the primary bull market was reconfirmed on September 3rd (as the SPY and Transports broke to new highs), according to Schannep’s “flavor” the primary bull market had not been confirmed, as he requires the three indices to break to new highs for the primary bull market to be confirmed.
With today’s price action, the primary bull market has also been confirmed under Schannep’s Dow Theory.

All in all, while we don’t know what the future has in store for us, technically and under the Dow Theory is in good health.

Here you have an updated chart depicting recent price action (take a look at the blue horizontal lines which represent the last primary bull market highs, which have been bettered by the three indices we monitor).

Primary bull market reconfirmed under Schannep's and my own interpretation

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

The primary trend was reconfirmed as bullish on October 17th, 2013, and November 13th, 2013, March 7th, 2014, and more recently, September 2nd, 2014, for the reasons given here, here, here and here.

So the current primary bull market signal has survived four secondary reactions.

The secondary trend is bullish, as explained here.

Gold and Silver

SLV and GLD closed down. For the reasons I explained here, and more recently here the primary trend remains bearish. On September 12th SLV closed at the June 27th, 2013 primary bear market lows. Closing “at” the lows is not a violation of such lows. On the other hand, GLD hasn’t even managed to violate its primary bear market lows. All in all: The primary bear market has not been reconfirmed yet.

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 you have an updated chart:

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. 

As to the gold and silver miners ETFs, SIL and GDX closed down.

On July 11th, I alerted the followers of this Dow Theory blog that SIL and GDX were close to signaling a primary bull market. Go to the relevant post and chart here. On July 22nd, I explained that the signal did not materialize yet, as you can read here, and recent price action seems to suggest that the primary bull market signal is not in sight yet.

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 Dow Theorist

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