Trends unchanged
US Stocks
Stocks have taken a pause.
On January 12th,
2018 the SPY, Industrials and Transports made their last confirmed closing
highs.
Thereafter, The Industrials
and the SPY made higher closing highs but the Transports did not confirm.
The longer the Transports do
not confirm, the more likely that the current bull swing (not primary bull
market) is coming to an end, and that a secondary reaction is about to start.
However, we have to wait.
GOLD AND SILVER
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. SLV made lower lows
(of no technical significance under the Dow Theory, though, since it was not
confirmed by GLD). For the time being, the primary bear market lows have not
been jointly revisited and hence the primary bear market has not been
reconfirmed. The longer the non-confirmation persists, the more likely that the
primary bear market could be nearing its end. However, we wait until we get a
real signal.
As it happened in September 2017, there seems to be growing bullishness around gold. In September, thanks
to the Dow Theory, I remained skeptical and I was proven right. Let’s see what
happens now.
Thus, yesterday, Zero Hedge
featured an article entitled “A Golden Opportunity for Precious Metals”. The
article basically says that gold is about to break above a descending trend-line, and silver is just about to break above a multiyear triangle. Go and
read the article.
While the article is
technically sound, I’d rather stick to the Dow Theory, if SLV breaks above its
triangle, it will also certainly break above the secondary reaction closing
high. On the other hand, if GLD breaks above its descending trend-line, it will
certainly break above its secondary reaction closing highs. I feel, though, that
the patterns of the Dow Theory are more solid, especially when coupled with the
principle of confirmation.
In the same bullish vein,
GoldCore announces that “Gold may have room to run as Chinese new year looms”. Maybe
yes, maybe not. I only now that I don’t need so much guesswork about the
Chinese and gold in order to see a bull market.
All in all, if there is
serious bullishness in precious metals both SLV and GLD should break above
their respective secondary reaction closing highs, which are highlighted in the
charts below with horizontal blue lines. Until this happens, the primary trend
remains fully in force.
 |
| Until both blue lines are not broken up, there is no primary bull market. Period. |
GOLD AND SILVER MINERS EFTs
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
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