Friday, August 31, 2018

Dow Theory Update for August 31: After a hiatus, I am back again




I apologize for the delay in posting. As I hinted in my last post (here) due to health-related issues of one of my sons I am very short of time. While not life threatening the health of my son demands lots of time on my side.


Furthermore, compounding health issues I underwent an accident (riding a mule, go figure!) last July. Once again, while not fatal (it could have been) I was injured and I am still in the process of recovering.

All in all, to my usual lack of free time, health issues deprived of the time, and more importantly, peace of mind to blog. Hopefully, little by little, I can go back writing again.

This first “post hiatus” post, will merely provide the “big” picture. Subsequent posts (if I find time) will delve more into details.

I do thank those readers which have sent emails inquiring about my personal situation. Thanks to all. By the same token, thanks to the readers that have posted comments whishing me the best. 


US STOCKS

As I warned in my last post, the S&P 500 bettered its secondary reaction closing highs, and on June 12th, 2018 a primary bull market signal was signaled. On August 3rd, 2018 the “classical/Rhea” Dow Theory did also signal a primary bull market as well (details and charts to be given hopefully soon). As stocks continue making new highs no secondary (bearish) reaction is in sight.


While I don’t have time to comment, here you have the charts concerning the market action since the beginning of this year, which includes the top, the secondary reaction, the primary (and brief) bear market signal, the subsequent secondary reaction and primary bull market signal. 

The current primary bull market which hitherto has survived one secondary reaction

 
And below the charts concerning market action since 2018 as per the classical Dow Theory

The "classical" Dow Theory is in gear with Schannep's Dow Theory: primary bull market


GOLD AND SILVER
To recap: The primary trend was declared bearish on July 7th, 2017, as explained here and here.

GLD broke up above the secondary reaction closing highs (on 1/24/2018, 2/14/2018, and 2/15/2018) unconfirmed by SLV and hence we got no primary bull market signal. Once again we see the importance of the principle of confirmation.


Later on, on July 17th, 2018 SLV violated its primary bear market lows of July 7th, 2018 unconfirmed by GLD. Finally gold capitulated and violated its primary bear market closing lows on August 1st, 2018, thus confirming SLV. The confirmed violation of the primary bear market lows, reconfirmed the primary bear market. Please mind that this was not a signal to “sell”, as such a signal (the indication of the change of the trend from bullish to bearish) was already given on July 7th, 2017. The confirmed violation of the last recorded primary bear market lows merely indicates a reconfirmation of the existing trend.

Here you have an updated chart:

 
Primary bear market finally reconfirmed

GOLD AND SILVER MINERS EFTs

To recap: The primary trend was declared bearish on October 4th, 016, as was explained here and here.

On 11/10/2017 SIL violated its primary bear market closing and GDX did not confirm. Lack of confirmation implied that the primary bear market has not been reconfirmed. On August 15th, 2018 GDX finally violated its December 15th, 2016 primary bear market lows, thereby nSIL. Thus, the primary bear market has been reconfirmed. As I wrote when commenting GLD and SLV, please mind that this was not a signal to “sell”, as such a signal (the indication of the change of the trend from bullish to bearish) was already given on October 4th, 2016. The confirmed violation of the last recorded primary bear market lows merely indicates a reconfirmation of the existing trend.

Thus, we are seeing a quite long primary bear market as we are approaching its second anniversary. Two years without a signal. Not bad.

Here you have the charts depicting the action since the end of 2016 until today.

 
Long primary bear market with recent reconfirmation


The Dow Theorist

Tuesday, June 12, 2018

Dow Theory Update for June 12: Watch the S&P 500. No time to blog




I am traveling for health related issues of my son. I will not be able to post until next week.

Readers keep an eye on the S&P 500 if the S&P 500 were to exceed its 3/9/2018 closing highs, as per Schannep’s Dow Theory a primary bull market would be signaled.

Sincerely,

The Dow Theorist

Monday, May 28, 2018

Dow Theory Update for May 28: Secondary reaction for US stocks according to the “classical” Dow Theory


 

No primary bull market signalled by Schannep’s Dow Theory as the S&P 500 has not confirmed


US STOCKS
The primary trend turned bearish on April 9, as was explained here, and more in depth here


An in depth post mortem of the last primary bull market and the entrails of the current primary bear market signal was penned here and here.

The secondary trend is bullish, as there is a secondary reaction against the primary bear market as explained in depth here


A pullback exceeding -3% set up US stocks for a primary bull market. As per Schannep’s Dow Theory the S&P 500 and the Industrials and/or Transports had to better the secondary reaction closing highs for a primary bull market to be signaled (such highs are displayed with light blue horizontal lines). On 5/11/2018 the Industrials broke up their secondary reaction closing highs. The Transports did so on 5/21/2018. However, the S&P 500 has not done so, and, as per the tenets of Schannep’s Dow Theory, absent the S&P 500’s confirmation, no primary bull market has been signaled. So no primary bull market yet. More about the necessity of the S&P 500 to confirm here.


Here you have an updated chart. The S&P 500 (bottom chart) must break up above the blue horizontal line (secondary reaction closing highs) for a primary bear market to be signaled

The S&P 500 has not bettered its secondary reaction closing highs. No primary bull market signaled


What about the “Rhea/classical” Dow Theory? Well, recent rallies have had both time and extent magnitude for a secondary reaction to be signaled. Thus, the Industrials has been rallying for 40 trading days. The Transports have rallied for 34 trading days. As per the classical Dow Theory stocks should be rallying for 3 weeks. Thus, it is evident that the time requirement for a secondary reaction has been met.


As to the extent requirement, anyway we cut it, we can say that such a requirement has met too. Thus, the Industrials have rallied 6.28% and the Transports have rallied 7.71%, which on a confirmed basis amply exceeds +3%. Furthermore, the advance has retraced more than 1/3 of the previous decline (the first leg of the primary bear market). So any way we cut it, we have a clear and solid secondary reaction. Here you have the details:


The current  2 days pullback underwent by the Industrials being less than 3% does not set up US stocks for a primary bull market. So we have to wait and see.

Here you have an updated chat. The blue rectangles display the current secondary reaction.

Clear secondary reaction against the primary bear market. No setup for primary bear market yet
 

Conclusion: For the time being the primary trend remains bearish.

GOLD AND SILVER

Months go by and the precious metals universe remains caught  in a narrow trading range which results in no change of trends. Even secondary trends remain unchanged.

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. GLD has broken up above the secondary reaction closing highs (on 1/24/2018, 2/14/2018, and 2/15/2018) unconfirmed by SLV. Thus, no primary bull market has been signaled and the primary trend remains unchanged.

GOLD AND SILVER MINERS EFTs

Precious metals (both the stocks ETFs anb the precious metals themselves remain listless for many months now. Hence trends have not changed.

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, and, as with GLD and SLV,the longer it takes for GDX to confirm the higher the likelihood that the primary bear market may be nearing its end.

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.


Sincerely,
The Dow Theorist