Dow Theory Update for January 6: US Stocks remain under bear market spell

Joshua Brown, of the Reformed Broker, sees global bear market

Trends have not changed since my last post of December 24^th. Market action, though, seems to confirm the picture I have been depicting during December: Be cautious with US stocks, and, after all, gold and silver miners might not be so weak after all.  I am writing before the close.

US STOCKS

The primary and secondary trend is bearish, as explained here:

http://www.dowtheoryinvestment.com/2015/12/dow-theory-update-for-december-14.html

Here is an additional post concerning the likely decline to follow primary bear markets signals:

http://www.dowtheoryinvestment.com/2015/12/dow-theory-special-issue-additional.html

Following the primary bear market signal of Friday 11th December, stocks made lower confirmed lows on 12/18/2015 and 1/6/2016 (today). Hence, any secondary (bullish) reaction is to be counted starting from these last recorded lows. Hitherto, no secondary reaction has materialized yet. Here you have an updated chart.

Primary bear market in full gear

Furthermore, there is global headwind for US stocks. Joshua Brown, quoting Meb Faber, and UBS, believes that a worldwide primary bear market is underway. Here you have the link to his succinct and interesting post entitled “The Global Bear Market Has Already Begun”

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. Since mid-November GDX has refused to confirm.

I see that gold and silver miners ETFs seem to be weathering the storm afflicting US (and world) stocks. Given pervasive weakness all around, their relative strength might be indicative that strong hands are quietly accumulating such stocks.

Sincerely,

The Dow Theorist