Friday, December 15, 2017

Dow Theory Update for December 15: Primary and secondary trends unchanged

 Precious metals continue languishing

All markets remain stuck in their respective trends. Days go by and nothing changes. While this may look boring, we are witnessing a normal environment for the Dow Theory. Trades tend to last more than one year, and, hence, this is not hectic trading. What we saw in the recent past (i.e. 2014-2016), with whipsaws, and frequent trades, was rather the exception than the rule.

US Stocks

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

The primary trend was reconfirmed on July 3rd, 2017 as was explained here

 US Stocks continue making higher closing highs, which implies that no secondary reaction is in sight.

Here you have an updated chart:

Huge primary bull market swing


The primary trend was declared bearish on July 7th, 2017, as explained here and here
The secondary trend is bullish, as was profusely explained here.

The pullback that got started on September 8th, 2017 has unambiguously setup SLV and GLD for a primary bull market. A quite different issue is whether the signal will be ever given.  An in-depth explanation here. Please mind that a “setup” is not the actual signal. In the meantime, SLV made lower lows (of no technical significance under the Dow Theory, though, since it was not confirmed by GLD). So, if the primary bear market lows were jointly revisited the primary bear market would be reconfirmed.

Here you have an updated chart. The blue horizontal lines display the closing highs of the secondary reaction which are the relevant levels to be broken up for a primary bull market signal to be given.

We have to wait. In the meantime: Bear market


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

The secondary trend is bullish as explained here

For the same reasons given when analyzing SLV and GLD, no primary bull market has been signaled for SIL and GDX, as explained here. GDX did not better its secondary reaction closing highs by a hair, but it failed to do so. Furthermore, SIL was very far from its secondary reaction closing highs.

On 11/10/2017 SIL violated its primary bear market closing lows (red arrow on the right side of the chart). GDX has not confirmed. Lack of confirmation implies that the primary bear market has not been reconfirmed.

Therefore, the current situation remains unchanged. We have a primary bear market signaled on 10/04/2016 (more than one year old, another candle to light). There is an ongoing secondary reaction against the primary bear market and a setup for a primary bull market. Recent action seems to suggest that it is more likely a reconfirmation of the primary bear market than a breakup of the secondary reaction closing highs which would be a primary bull market signal. All in all, given that “the trend is your friend” it seems that we still have a bear market for some more time.

Here you have an updated chart that displays all price action since the September 2016 (thus you can see the primary bear market signal of October 2016, the secondary reaction and the pullback –orange rectangles- that setup the miners for a primary bull market).

If non confirmation by GDX persists, there might be a change of trend

The Dow Theorist

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