Dow Theory Update for December 9: US Stocks flirting with primary bear market signal

Trends remain unchanged

US STOCKS

The primary trend is bullish as explained here and here

The secondary trend is bearish (secondary bearish reaction against the primary bullish trend) as explained here:

On Nov 19, the Transports rallied more than 3% from the secondary reaction closing lows and hence the setup for a primary bear market was completed. In case we had any doubts, on the next trading day the SPY and the Industrials did exceed the +3% threshold. All in all, now we have to wait for either one of the following developments:

            1) Either the secondary reaction closing lows are jointly violated, in which case a primary bear market would be signaled.

            2) Or, the last recorded closing highs are jointly broken out, in which case the primary bull market would be reconfirmed.

So now we have to patiently wait. Nonetheless, the technical picture is weak for stocks. The Transports made on 11/20/2015 an unconfirmed higher high, which is a yellow flag, as there was no confirmation. Some days later, all stocks started to head south. Furthermore, the Transports violated their 11/13/2015 secondary reaction closing lows (which hitherto has been unconfirmed) on 12/3/2015. If the SPY confirms (or if the Industrials confirm, provided a secondary reaction is appraised based exclusively on the Transports and Industrials), a primary bear market would be signaled. Below an updated chart:

 

The Transports (middle chart) have already violated their sec reaction lows (red horizontal line). If confirmed, a primary bear market would be signaled

GOLD AND SILVER

The primary and secondary trend is bearish as explained here.

GOLD AND SILVER MINERS ETF

The primary trend remains bullish as explained here.

SIL has violated its 9/10/2015 closing low (last primary bear market low) unconfirmed by GDX. Both ETF miners are under a strong secondary reaction (displayed by the red rectangles on the chart below).

We have to wait for GDX to confirm. Until then we cannot declare a new primary bear market. The longer it takes for GDX to confirm, the better the odds for the primary bull market to survive. However, price action is king.

Sincerely,

The Dow Theorist