Dow Theory Update for April 20th: Secondary Reaction for US Stocks signaled on April 13th.

Trends in precious metals unchanged

 

US STOCKS

The primary trend is bullish since November 21^st, 2016, as explained here and here.

On April 13^th, the Industrials declined more than 3% (from their March 1^st, 2017 closing highs). Since the Transports had already declined more than 3%, the extent requirement for a secondary reaction to exist was met.

The S&P 500 did not decline 3% (it merely declined -2.79%). However, under Schannep’s Dow Theory, it merely suffices two indices to confirm as to the time or extent requirement is concerned.

Here you have the specific calculations concerning the decline:

 

As to the time requirement, it had been amply met in the past, as explained here.

On April 13^th, the Industrials, Transports and S&P 500 had declined for    31 trading days. On April 19^th, the Industrials made a lower closing low, which extended its decline to 33 trading days.

All in all, stocks are now under a secondary reaction. Now, at least one index should rally more than 3% off the hitherto recorded secondary reaction closing lows in order to set up stocks for a primary bear market signal. I am writing before the close so nothing I write is final. It seems, though, that the Transports might be rallying by more of 3%. Let’s wait and see.

Here you have an updated chart. The orange rectangles display the ongoing secondary reaction:

 

US Stocks under secondary reaction

Have we seen the top for stocks? And we are heading towards a primary bear market signal. See my thoughts on this topic here

GOLD AND SILVER

The primary trend turned bullish on April 12^th, 2017 as explained here

  

The secondary trend is bullish too. 

As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action. Furthermore, the gold and silver miners ETFs remain in a primary bear market, unless a bullish confirmation comes soon, I see even more headwind.

GOLD AND SILVER MINERS EFTs

The primary trend is bearish, as was explained here and here.

The secondary trend is bullish as explained here

As was explained here, SIL and GDX have set up for a primary bull market signal.
 

If the last recorded primary bear market lows were jointly revisited, the primary bear market would be reconfirmed.

As an aside, it is worth mentioning that the primary trend when using weekly bars is bearish, which tends to be headwind for any meaningful bullish action.

Sincerely,

The Dow Theorist