Tuesday, April 3, 2018

Dow Theory Update for April 3: After some hair-curling days no primary bear market signal yet

Precious metals unchanged

I am not posting as frequently as I did in the past for the following reasons:

      1)  No change of trends. Not even secondary trends. When changes of trends have occurred I have diligently posted.

 2) Time, as usual, remains in short supply. Family and professional engagements don’t let much time free for blogging.

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

The secondary trend is bearish (secondary reaction against the primary bull market), as was explained here and here.

After the secondary reaction closing lows the Industrials, Transports and S&P 500 have rallied more than 3%. So unambiguously the setup for a primary bear market signal has been completed.

If the 2/8/2018 closing lows (Industrials and S&P 500) and 2/9/2018 (Transports) were jointly violated (the S&P 500 must necessarily violate its own secondary reaction closing lows as explained here), a primary bear market signal would be flashed. Thus, the S&P 500 together with either (or both) the Industrials and the Transports must violate their secondary reaction closing lows so that a primary bear market is signaled. The red horizontal lines are the significant levels to be violated.

On 3/23/2018 the Industrials violated its secondary reaction closing lows. However, until now, neither the Transports nor the S&P 500 have done so. Yesterday the S&P 500 did not confirm by a hair. It closed at 2581.88 whereas its secondary reaction closing lows stand at 2581.00. In any instance, no signal has been given yet. We have had some hair curling trading days but no signal yet. We have to wait either for higher highs (primary bull market reconfirmed) or the final breakdown. Please mind that the SPY (S&P 500 ETF) did yesterday violate its secondary reaction closing lows. However, as per the Dow Theory it is the S&P 500 the index which must violate its lows. Hence, no signal yet.

Here you have an updated chart.

It ain't over until it ain't over. No primary bear market signal yet


In spite of all the turbulences that seem to afflict markets. The precious metals have not even changed their secondary trends.

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.

Here you have an updated chart:

Months without changes


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.

Here you have an updated chart:
Neither the primary bear market gets reconfirmed nor is signaled a primary bull market

The Dow Theorist

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