Dow Theory Update for August 2: US stocks set up for primary bull market signal

Trends unchanged

US STOCKS

The primary trend turned bearish on June 24^th, as was profusely explained here.

The secondary trend is bullish (secondary reaction against the primary trend), as all three indices (Industrials, Transports and SP 500) have been rallying for more than 8 trading days (average of the three indices) and each of them has rallied more than three percent.

The Transports have declined more than 3% from their July 14^th secondary reaction closing highs and has, thus, set up US stocks for a primary bull market. Now we have to watch at the secondary reaction closing highs (upper right side of the blue rectangles). If the SPY together with any other index were to break up such closing highs a primary bull market would be signaled. Please mind that a setup does not imply that a signal will necessarily follow.

Here you have an updated chart:

 

The red orange rectangle displays the Transports current pullback exceeding 3%

As I explained here, if the Transports were to break out above their April 20^th closing highs (primary bull market highs), a primary bull market would be signaled.

Therefore, in the current juncture, we have two alternative ways to signal a bull market:

The first one, which is the most usual, would be the breaking out of the current secondary reaction lows.

The second one, which is more unusual, would be the Transports breaking up its primary bull market highs, thus confirming the SPY and Industrials.

 

GOLD AND SILVER

The primary trend is bullish (Dow Theory signal of March 17^th, 2016), as reported here and here.

The secondary trend is also bullish as explained here

Recent declines do not fulfill the time requirement for a secondary reaction yet (or never). Given that the time requirement for a secondary reaction has not been met, I don't bother with calculation the "extent" requirement, as I need both to declare the existence of a secondary reaction.

GOLD AND SILVER MINERS ETFs

The primary and secondary trend is bullish as explained here, and more recently here

Recent declines do not fulfill the time requirement for a secondary reaction yet (or never). Given that the time requirement for a secondary reaction has not been met, I don't bother with calculation the "extent" requirement, as I need both to declare the existence of a secondary reaction. Furthermore, GDX and SIL have made new higher highs which negate any secondary reaction (and resets the clock to zero in order to appraise a new one)

Sincerely,

The Dow Theorist