Secondary reaction now without doubt in existence
The setup for a primary bear market signal I will
write about, does not depend on today’s close.
US STOCKS
The primary trend was reconfirmed on July 3rd, 2017 as was
explained here
In my last post, with the market situation at February
7, I discussed whether we had or not a secondary reaction. I wrote that
Schannep’s interpretation was “yes”, albeit, it
was not so clear-cut.
Well, the Industrials and the S&P 500 declined
until February 8th, and the Transports until February 9th. Thus,
even if we consider January 29th as the starting date to count “calendar
days decline”, now we fully have had 10 calendar days on at least two indices.
From January 29th to February 8th (both included) we get
11 calendar days for both the Industrials and the S&P 500. All in all, no
doubts about the existence of a secondary reaction anyway you appraise it.
From their February 8th closing lows the
Industrials and the S&p 500 have rallied (not counting today) for 4 trading
days. Both have also rallied by more than 3%. The Transports have rallied for 3
trading days and have also rallied by more than 3%. The table below gives you
the exact percentages.
As per Schannep’s Dow Theory, both the extent (at least one index should rally
by more than 3%) and the time
requirement (minimum 2 days rally) have been met in order to set up US stocks
for a primary bear market signal. Of course, “setup” is not tantamount to the
actual signal, if stocks were to better their last recorded primary bull market
highs, then the primary bull market would be reconfirmed. In other the get a primary bear market signal
the S&P 500 together with other index should violate their primary bear
market closing lows (February 8 for the SP500 and Industrials and Feb 9 for the
Transports).
Here you have an updated chart:
 |
| Secondary reaction and primary bear market setup completed |
GOLD AND SILVER
In spite of all the turbulences that seem to afflict markets. The precious
metals have not even changed their secondary trends.
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.
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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