Dow Theory Update for October 4: Stocks set up for primary bear market signal on September 30

It is very likely that a primary bear market for gold and silver will be signaled at today’s close

I am writing before the close so things might change after the close. So reader beware.

I am with a very heavy schedule so it is going to be a short post.

US STOCKS

The primary trend is bullish as explained here and here

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

According to the “Rhea/Classical” Dow Theory no secondary reaction has been signaled yet, as explained here.

On September 30^th, the Transports managed to rally more than 3% off its September 14^th secondary reaction closing lows, and hence it set up US stocks for a primary bear market signal. Moreover, the Transports make a higher closing high (primary bull market closing highs of September 8^th were bettered) which was unconfirmed by the SPY and Industrials. The longer the lack of confirmation persist the more suspect the breakout.

Please mind that a setup for a primary bear market is not the actual signal. If the Transports breakout got finally confirmed, the primary bull market would be reconfirmed.

Here you have an updated chart:

If the red horizontal lines (right side) got violated a primary bear market would be signaled

 

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

I am writing before the close and both GLD and SLV have violated their respective secondary reaction closing lows. If this situation persisted after the close, a primary bear market would be signaled. Here you have a chart:

If SLV and GLD closed below the red horitzontal line, a primary bear market would be signaled (highly likely)

GOLD AND SILVER MINERS ETFs

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

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

I am writing before the close and both SIL and GDX have violated their respective secondary reaction closing lows. If this situation persisted after the close, a primary bear market would be signaled. Here you have a chart:

If SIL and GDX closed below the red horizontal line, a primary bear market would be signaled (highly likely)

Sincerely,

The Dow Theorist