Monday, July 3, 2017

Dow Theory Update for July 3: The Transports confirm the S&P 500 and the Industrials

Stocks “in the clear”. Primary bull market reconfirmed and secondary reaction extinguished



I will be travelling with a quite heavy schedule in the following days. Hence, it is unlikely that I find time to update this blog in the next 7 days. This remark applies especially to GLD and SLV. They are on the verge of a primary bear market signal. Thus readers of this blog, based on what I say today, should do their own homeworks in case SLV and GLD finally violated their secondary reaction lows. 

As to US stocks, the odds favor at least two weeks without news. The news have been made today. 

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

Today the Transports broke up their March 1st, 2017 primary bull market closing highs. By doing so it has confirmed the S&P 500 (breakout on May 10th) and the Industrial (breakout on June 1st).

Here you have an updated chart:

Stocks "in the clear". Any new socondary reaction is to be counted from the higher highs
The implications of today’s breakout are as follows:

      1) The primary bull market has been unambiguously confirmed.
      2) The secondary (bearish) reaction against the primary bull market is herewith extinguished. We “reset” our counter to zero. Any new future secondary reaction is to be counted from the higher highs.

3) Thus, the secondary trend is labeled as bullish as of today.

4) As far as the “Rhea/Classical” Dow Theory is concerned, today’s breakout confirm the Industrials and re-confirm the primary bull market. While it was debatable (according to alternative interpretations of the Classical Dow Theory) whether there was to begin with a secondary reaction against the primary bull market, higher confirmed highs make clear that both the primary and secondary trend is bullish (more about the two alternative interpretations here)

While nothing is certain, it seems that the trade that started on November 21st, 2016 is going to be a winner. Barring a catastrophic overnight market crash, the odds favor a winning trade. Time builds profits.

As an aside, please mind that the trend when appraised with weekly bars as per Dow Theory rules, is bullish.


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

The secondary trend is bearish, as explained in depth here.

SLV and GLD set up for a primary bear market signal, as explained here.
On June 6th, 2017 GLD broke up its April 18th, 2017 primary bull market closing high (bottom chart, blue arrow). However, SLV did not confirm by a wide margin (which I interpret as being bearish), which implies that the primary bull market was not confirmed. Immediately thereafter, both precious metals have declined with gusto. Today, SLV closed exactly at their 5/9/2017 secondary reaction lows. GLD barely failed to do so. All in all, very close to a primary bear market signal.

If SLV and GLD jointly violated their primary bear market closing lows (red horizontal lines), a primary bear market would be signaled.

Here you have an updated chart:

SLV and GLD on the verge of a prikmary bear market signal


Nothing seems to happen with the gold and silver miners ETFs. No news as usual.

Here you have an updated chart:
Time pases by and nothing happens with SIL and GDX

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.

The Dow Theorist

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