The primary trend remains bullish, though.
The Industrials, Transports
and SPY closed up.
The SPY and Industrials have
risen more than 3% from the secondary reaction lows. Since the rally from the
lows took 2 days (one day would not be enough as per Schannep’s rules), US
stocks set up for a primary bear market signal. To complete the primary bear
market setup it was only necessary for one index to rally more than 3%.
However, in this case, two indices have deigned to rally more than 3%.
Here you have the details of
So now two things may happen:
Stocks extend their gains and
break up the last recorded primary bull market closing highs, in which case the
primary bull market would be reconfirmed, and the current secondary reaction
would be declared as extinguished (and hence, the secondary trend would be
labeled as “bullish” too). The blue horizontal line on the chart below shows
the relevant levels to be broken up.
The SPY (which in this case
has rallied more than 3%) together with other index (be it the Industrials or
the Transports) violate the secondary reaction lows, in which case a primary
bear market would be signaled. The red horizontal line on the chart below shows
the relevant levels to be violated.
|Two options left: Either primary bull market reconfirmed or primary bear market will be signaled|
The primary trend remains
bullish, as explained here.
The secondary trend is
bearish, as there is an ongoing secondary reaction, as explained here.
Gold and Silver
SLV and GLD closed up. The primary bear market was reconfirmed on October 3rd 2014,
as GLD finally broke below the June 27th, 2013 primary bear market
closing lows (something which SLV had already done on Sept 17, 2014). As lower lows have been confirmed, the
primary bear market has been reconfirmed.
For the reasons I explained here, and more
recently here the primary trend remains bearish.
The secondary trend is bullish (secondary bullish reaction against the primary bear
market), as explained recently here. Furthermore, SLV and GLD completed the setup for a
primary bull market, as explained here.
So now there are only two
1) Either both SLV
and GLD break above the secondary reaction highs, in which case
a primary bull market would be signaled.
2) Or both SLV and
GLD violate the last recorded primary bear market lows, in which case, the
primary bear market would be reconfirmed.
In spite of the
secondary bullish reaction, the primary trend remains bearish too.
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 bearish.
On a statistical basis the
primary bear market for GLD and SLV is old. Almost two years have elapsed since
the bear market signal was flashed. 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. When
will this vicious bear market end? I don’t know, and I don’t need to know. I
only know that the Dow Theory will see to my being informed punctually when a
new primary bull market is born.
Gold and Silver miners ETFs (GDX and SIL)
As to the gold and silver miners ETFs, SIL and GDX closed up. The
primary bear market was re-confirmed on October 27th, 2014 as explained
primary trend for SIL and GDX is clearly bearish, as was profusely
explained here and here.
The secondary trend is bearish
too, and no secondary reaction has been signaled yet.
The Dow Theorist