No primary bear market has been signaled for precious metals
US STOCKS
The primary trend as per
Schannep’s Dow Theory is bullish since
March 1st, 2019 when both the Industrials and the
S&P 500 closed at +19% from the 12/24/2018 bear market closing lows.
However, “capitulation”
suggested the opening of a partial commitment to stocks on the very day of the
market bottom (12/24/2018). More about that partial commitment here.
And more about “capitulation”
in general in the following links:
The secondary trend turned bearish on May 9, 2019 as
explained here.
Since that date stocks have further declined. No rally
in at least one index exceeding +3% has occurred and, hence, the setup for a
primary bear market signal has not been completed yet. This means that US
indices can fall further without signaling a primary bear market. However, we
should bear in mind that if both the S&P and the INDU declined more than
-16% on a confirmed basis a primary bear market would be signaled.
Here you have an updated chart. The green triangles
show the weak rally that occurred which failed to reach +3% in at least one
index.
 |
| Ongoing secondary reaction against the primary bull market |
As per the “Classical/Rhea” Dow Theory the secondary
trend is now bearish too (secondary reaction against the primary bull market).
The Industrials have been declining since 04/23/2019 whereas the Transports
have declined since 04/24/2019. More than one month of confirmed declines amply fulfill the time requirement under
the classical Dow Theory.
As to the extent
requirement the declines greatly exceed on a confirmed basis -3%.
Furthermore, the Industrials have retraced ca. 38% of the previous bull swing
(which started on 12/24/2018) and the Transports have retraced ca. 55%. Since
more than 1/3 of the previous bull swing has been retraced on a confirmed
basis, we can conclude that there is no doubt about the existence of a
secondary reaction.
Here you have an updated chart displaying the rally
that got started on 12/24/2018, the ongoing secondary reaction (red rectangles)
and the Fibonacci retracements (horizontal lines).
 |
| Red rectangles on the right side of the charts display ongoing secondary reaction as per "Classical" Dow Theory |
GOLD AND SILVER
The primary trend is
bullish since 12/24/2018 as explained here. No changes. We finally got a secondary
reaction on 4/16/2019 when GLD violated its 03/07/2019 closing lows (and
confirmed SLV which had done so some days ago). More about the entrails of such
a secondary reaction here and here.
The charts below display
with green rectangles a tiny rally which did not managed to even attain +3%
(even before adjusting for volatility) and hence did not qualify to set up SLV
and GLD for a primary bear market signal. The same applies to the ongoing rally
which got started some days ago.
On 05/28/2019 SLV made a
lower low which was unconfirmed by GLD. All in all the secondary reaction
continues.
 |
| No rally highlighted with green rectangles managed to set up SLV and GLD for a primary bear market |
GOLD AND SILVER MINERS ETFs
The primary trend is
bullish since 12/18/2018 as explained here. No changes.
The secondary trend is bearish (secondary reaction) since 4/18/2019 when
GDX violated its previous 03/06/2019 closing lows (and confirmed SLV which had
done so several days before), as was explained here. and here
The charts below display to small green rectangles which are rallies
which did not manage to set up SIL and GDX for a primary bear market signal.
SIL merely rallied 2.4% and GDX, while managed to rally 3.76%, it did not reach
the volatility-adjusted minimum volatility which at 05/13/2019 (end of the
green rectangles) stood at 6.14%. More about volatility-adjusted reading for
precious metals, here. Hence, no
setup. Following such a mini rally, SIL made lower lows which were unconfirmed by GDX, hence suggesting
that the secondary reaction may be nearing its end.
 |
| Secondary reaction going on. |
Sincerely,
The Dow Theorist
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