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