Bizarre picture for US stocks
US STOCKS
The secondary trend is bearish
(secondary reaction), as explained here.
As I alerted here, US stocks have set up for a primary
bear market signal.
Please mind that a setup for a primary bear market
does not imply that a primary bear market is certainly coming. The secondary
reaction closing low may not be jointly violated (or never be violated) in
which case no primary bear market would be signaled. More about the different
scenarios and how this time (should there be any primary bear market signal)
the classical Dow Theory could be earlier than Schannep’s here (which is no flaw in
Schannep’s Dow Theory, as its very rules say that “classical” Dow Theory
signals are to be taken into account as well).
As you can see on the chart below, the Transports have
rallied more than 3%, and hence it has set up stocks for a primary bear market
signal. Please mind that in order to set up stocks for a primary bull/bear
market signal the principle of confirmation does not apply. For a more in-depth
information concerning the nuances to the principle of confirmation, please go here.
We are at a bizarre juncture. We have a primary bear
market setup. The SPY has broken up its previous primary bull market closing
highs. The S&P 500 has not achieved this feat yet but it is very close to doing it. Nor have the Transports
and the Industrials. Thus, it seems likely that the S&P 500 could make a
higher high which is likely to be unconfirmed (which would be bearish)…Let’s
see what happens, and we’d better don’t jump the gun. What we do know is that
any joint violation of the secondary reaction lows would entail a primary bear
market.
GOLD AND SILVER
On May 24th, I wrote that SLV and GLD were
very close to signaling a secondary (bearish) reaction against the primary bull
market. I wrote that the extent
requirement had been fulfilled yet. Well, recent declines have seen to it.
Now, the decline unambiguously qualifies as a secondary reaction.
Here you have an updated chart.
Secondary reaction against the primary bull market |
Now we have to wait for subsequent action. No setup
for primary bear market has materialized yet.
GOLD AND SILVER MINERS ETFs
The primary and secondary trend is bullish as
explained here
The current decline has not fulfilled the time requirement, and hence I don’t
lose my time examining whether the extent requirement has been met. I need both
requirement to be met for a secondary reaction to exist. This is what we call
the principle of internal confirmation
(not only the two indices should confirm each other, but time and extent
should also confirm)
If hope the market leaves me in peace some days, as my
time (as usual) is getting very scarce.
Have a nice weekend
Sincerely,
The Dow Theorist
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