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