Dow theory Update for March 14: US stocks set up for primary bull market signal as per the “Rhea/Classical” Dow Theory

Primary and secondary trends unchanged for gold, silver and their miners ETFs

I am short of time, as usual. 

Let's hope that next week I pen another post concerning "Capitulation".

US STOCKS

The primary trend as per Schannep’s Dow Theory is bullish since March 1^st, 2019 when both the Industrials and the S&P 500 closed at +19% from the 12/24/2018 bear market closing lows. The secondary trend is bullish too, as explained here.

The “Rhea/Classical” Dow Theory is not endowed with tools like capitulation or “cyclical” bull market in order to signal a change of trend. Hence, when dealing with the “classical” Dow Theory, we just have three ways to determine a change of the primary trend from bearish to bullish:

a)     The typical sequence bear market lows, rally, pullback and subsequent breakup.

b)     Breaking up the former primary bull market highs.

c)     Breaking up the highs of the previously completed secondary reaction (more about this bizarre entry here)

Hence, even if the S&P 500 and the Industrials rallyied more than 19% we could not declare a change of trend from bearish to bullish when we deal with the “Rhea/classical” Dow Theory.

However, on 03/08/2019 the Transports had declined more than 3%. Namely from a closing high on 02/21/2019 at 10632.49 to a closing low on 03/08/2019 at 10116.86.

Here you have an updated chart. The Transports are the bottom chart. The blue rectangle displays the secondary reaction. The orange rectangle the -3% pullback (only in the Transport, but we don’t need confirmation for such a pullback. More about when confirmation is not necessary here). The red horizontal lines display the price levels to be broken up for a primary bull market to be signaled. 

Setup for primary bull market completed

All in all, we have a setup for a primary bull market signal. In the meantime, the primary trend according to the “Rhea/classical” Dow Theory remains bearish.

GOLD AND SILVER

The primary and secondary trend is bullish since 12/24/2018 as explained here. No changes. The most recent pullback did not fulfill the time requirement for a secondary reaction. Hence, no secondary reaction.

GOLD AND SILVER MINERS ETFs

The primary and secondary trend is bullish since 12/18/2018 as explained here. No changes. 

The most recent pullback did not fulfill the time requirement for a secondary reaction. Hence, no secondary reaction.

Sincerely,

The Dow Theorist