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