Wednesday, June 8, 2016

Dow Theory Update for June 8: Gold and Silver miners ETFs break up to new closing high

And hence not even a secondary reaction existed for them


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

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. The Industrials (and also the SPY) have also rallied by more than three percent. Thus, unambiguously the set up for a primary bear market is beyond questioning. However, at the same time, it seems more likely that such strong rallies (while setting up the market for a primary bear market signal) are harbingers of a break up above the last recorded primary bull market highs of April 20th. We will not jump the gun, and wait for market action. Until now only the SPY (and S&P 500) has broken up its previous primary bull market highs. Thus, anything may happen.

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).


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

The secondary trend is bearish (secondary reaction against the primary bull market), as explained here.

SLV and GLD have rallied vigorously after May 27th (GLD) and June 1st (SLV) closing lows. While it has been a strong rally, I feel it does not fulfill the extent requirement in volatility-adjusted terms in order to set up both precious metals for a primary bear market signal. Please mind that this is not exact science. However, both rallies are falling short of the minimum percentage requirement. More about volatility adjustments and how I perform them, here.
Here you have an updated chart. The red rectangles display the secondary reaction and the blue rectangles display the current rally. 

Current rally still lacks enough magnitude


The primary and secondary trend is bullish as explained here

I mentioned in my last post that the then ongoing decline for both SIL and GDX didn’t qualify as a secondary reaction, as explained here.
Well, today both SIL and GDX have jumped to new closing highs. Therefore, the clock for appraising a secondary reaction has been set to zero. Any secondary reaction is to be counted from the last confirmed closing highs. Here you have an updated chart. The blue arrows at the right side of the chart display the today’s closing highs. 

There was no secondary reaction for SIL and GDX

The Dow Theorist

No comments:

Post a Comment