Dow Theory Update for February 23: Secondary (bullish) reaction against primary bear market signaled on February 22

Trends for precious metals unchanged

 

US STOCKS

The Transports has been rallying for 23 trading days since its Jan 20 closing lows.

The INDU and SP500 have been rallying for 7 trading days and 11 calendar days.

Hence, 3 indices have rallied more than 10 calendar days (it suffices just two).

And the average time of the rally exceeds 8 trading days (23+7+7/3).

All three indices have greatly exceeded the +3% threshold.

Thus, yesterday, February 22, a secondary reaction was signaled.

Here you have an updated chart (blue rectangles on the left side of the charts) showing the ongoing secondary reaction:

 

Secondary reaction against the primary bear market

Hitherto, no setup for primary bear market signal, as no qualifying pullback (two days decline exceeding -3% on at least one index) has occurred yet.

So now we have to wait.

The primary 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

GOLD AND SILVER

The primary trend is bearish as explained here.

The secondary trend turned bullish on January 26, as explained here

On February 16^th, GLD after having declined for two days, and going from a closing high of 119.06 to a closing low of 114.77, set up both precious metals for a primary bull market signal. GLD declined -3.6%, which in volatility adjusted terms, given the current volatility levels of the SPY and GLD, is a movement of sufficient magnitude. More about the rationale of volatility adjustments and how I perform them, here.

SLV did not even managed to decline for two days. However, to set up markets for a primary bull/bear market it suffices to have just one index. The principle of confirmation does not apply on this specific instance, as was explained in depth, here.

So now we have SLV and GLD set up for a primary bull market signal. If the GLD’S 2/11/2016 closing highs and SLV’s 2/12/2016 closing highs were jointly broken out, a primary bull market would be signaled.

GOLD AND SILVER MINERS ETFs

The primary trend is bearish, as explained here.

The secondary trend is bullish as explained here.

Sincerely,

The Dow Theorist

Dow Theory Update for February 18: Gold and Silver set up for primary bull market signal on February 16th

No secondary reaction for stocks yet

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
 

On February 11, 2016 the Industrials and SPY violated their January 20 closing lows. The subsequent rally has not hitherto managed to better the January 29^th closing highs (for the SPY and Industrials). Even if such minor highs were broken out, we would not have two indices that rallied for at least ten calendar days, and hence we are still relatively far from declaring the existence of a secondary reaction.

GOLD AND SILVER

The primary trend is bearish as explained here.

The secondary trend turned bullish on January 26, as explained here

On February 16^th, GLD after having declined for two days, and going from a closing high of 119.06 to a closing low of 114.77, set up both precious metals for a primary bull market signal. GLD declined -3.6%, which in volatility adjusted terms, given the current volatility levels of the SPY and GLD, is a movement of sufficient magnitude. More about the rationale of volatility adjustments and how I perform them, here.

 

SLV did not even managed to decline for two days. However, to set up markets for a primary bull/bear market it suffices to have just one index. The principle of confirmation does not apply on this specific instance, as was explained in depth, here.

 

So now we have SLV and GLD set up for a primary bull market signal. If the GLD’S 2/11/2016 closing highs and SLV’s 2/12/2016 closing highs were jointly broken out, a primary bull market would be signaled.The short horizontal red lines at the right side of the charts display the current relevant levels to be broken up for the primary bull market to be signaled.

Here you have an updated chart:

Finally GLD deigned to decline for two days with enough magnitude....alea jacta est

GOLD AND SILVER MINERS ETFs

The primary trend is bearish, as explained here.

The secondary trend is bullish as explained here.

Sincerely,

The Dow Theorist

Dow Theory Update for February 12: Silver and Gold miners ETFs under secondary (bullish) reaction against primary bear market

No secondary (bullish) reaction for stocks against primary bear market yet

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
 

On February 11, 2016 the Industrials and SPY violated their January 20 closing lows. So the primary bear market seems quite entrenched. 

GOLD AND SILVER

The primary trend is bearish as explained here.

The secondary trend turned bullish on January 26, as explained here

No pullback has qualified in extent in order to set up SLV and GLD for a primary bull market. So we have to wait. 

GOLD AND SILVER MINERS ETFs

The primary trend is bearish, as explained here.

The secondary trend is bullish (secondary reaction against the primary bear market). If we content ourselves with just 10 days (2 weeks) for a secondary reaction to be declared, then the secondary reaction was signaled on February 3. If we require 3 weeks of ascending prices (15 trading days) as per “classical” Dow Theory then the secondary reaction was signaled on February 11, 2016. The extent requirement has been amply fulfilled (even after adjusting for volatility). No setup for primary bull market signal has materialized yet, as we have not witnessed a pullback of a minimum of two days.

If the torrid rally continues, we could be faced with a primary bull market signal even in the absence of a pullback of at least two days. We should recall Rhea’s “alternative” primary bull/bear market signal, namely, the highs (lows) of the last completed secondary reaction. More about this often neglected signal, here.

 

I have displayed with red horizontal lines the closing highs of the last completed secondary reaction (that is the "alternative" Rhea primary bull market signal levels). As you can see GDX has broken out above its last completed secondary reaction closing highs. However, SIL has failed to confirm, and hence, even if we apply Rhea’s “alternative” primary bull market signal, we cannot declare the primary trend as bullish. Thus, we have to wait.

Here you have an updated chart

 

Strong secondary reaction for SIL and GDX

Sincerely,

The Dow Theorist