Tuesday, August 9, 2016

Dow Theory Update for August 9: If the Industrials close above 18595.03 a primary bull market will be signaled

Trends unchanged

I am writing before the close (13:51 pm NY time), so it might happen that if the Industrials exceed on a closing basis 18595.03 a primary bull market would be signaled.


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

The secondary trend is bullish (secondary reaction against the primary trend, highlighted with blue rectangles on the charts below), 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 14th 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 (red horizontal red lines on the right side of the chart) to be broken up by the S&P 500 and/or the Industrials or Transports. The S&P 500 did break up its secondary reaction closing highs of July 22nd (2175.03) last Friday, August 5th. The Industrials missed by a hair breaking up its July 20th secondary reaction closing highs (which stand at 18595.03). However, as of this writing, the 18595.03 level has not been exceeded on a closing basis yet, and hence, the primary trend has not changed and remains bearish.

Here you have an updated chart:

If the Industrials better their secondary reaction closing highs (red horizontal line on top of the chart) a primary bull market would be signaled
As I explained here, if the Transports were to break out above their April 20th closing highs (primary bull market highs), a primary bull market would be signaled too, irrespective of the current Industrials action.

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 SPY (S&P 500) has done so last Friday August 5th but unconfirmed.

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


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

The secondary trend is also bullish as explained here


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

The Dow Theorist

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