Wednesday, April 20, 2016

Dow Theory Update for April 20: Primary bull market signaled by the “classical/Rhea” Dow Theory on April 19th

Gold non confirmation continues


The primary and secondary trend (as determined by Schannep’s Dow Theory) is bullish, as explained here and here.

Yesterday, April 19th, the Transports broke out above its March 18th, 2016 closing highs (secondary reaction highs), and, hence, according to the “Rhea/classical” Dow Theory (which only uses the Industrials and Transports in order to look for confirmations), a primary bull market was signaled.

By the way, now we have a triple confirmation, which is normally good.

Another observation: Even though I felt terribly bad taking Schannep’s Dow Theory signal some days ago (as I felt a decline was at hand), subsequent price advances have proven that it is not wise to wait out Dow Theory signals. Nobody knows the future, and strength can last longer than expected. Will prices go down in the coming days? Maybe. Who knows. But the takeaway is this: As soon as you see a Dow Theory signal (and you decide to take the trade, as you are not obliged to be batting all the time), act, and don’t wait for a pullback that may not materialize.

Final observation: This specific primary bull market signal proves that in most instances (not all) Schannep’s Dow Theory reacts swifter than the classical one. This applies to both entries and exits (more about it here), which results in outperformance and lower drawdowns.

Here you have an updated chart displaying the two signals (Schannep’s and the “classical/Rhea”)

Four trading days later, the Classical/Rhea Dow Theory signaled a primary bull market


The primary trend and secondary trend is bullish, as reported here and here.

SLV has recently made higher closing highs which have been unconfirmed by GLD. Such a lack of confirmation, unless gold confirms soon,  might be indicative of an impending secondary (bearish) reaction against the current primary bull market


The primary and secondary trend is bullish as explained here

On the other hand, SIL’s higher highs have been confirmed by GDX’ higher highs, so technically the primary bull market remains unchallenged.

The Dow Theorist

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