Primary trend for US stocks remains bullish
I am publishing on June 6th before the
open, what I wrote after the close of June 5th
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:
Yesterday I wrote that I was discerning a primary bear
market setup in US stocks. Today, I had more time to look at it, and, yes,
yesterday a primary bear market setup for US stocks had been completed. Both the
Industrials and Transports had rallied for 2 days and the Transports, by a
hair, had exceed the minimum movement threshold of 3% (not so the Industrials and S&P 500).
Yesterday, the S&P 500 had only rallied by one day, hence not reaching the
minimum 2 days requirement. However, as per Schannep’s Dow Theory to complete the setup only 2 days of rally following the secondary reaction lows on
just two indices is necessary (which had been accomplished by the Industrials and the
Transports). On the other hand, the +3% rally need occur only in just one
index. No need of confirmation for that rally. This aspect has been explained
in depth in this post.
If we take a look at today’s action (close of June 5th, 2019), we can even more
clearly conclude that stocks have setup for a primary bear market signal. The
Industrials and Transports have rallied for 3 days, whereas the S&P 500
have rallied 2 days. The Transports have rallied +4.44% , whereas the
Industrials and the S&P 500 stand at 2.9% (please remember that we don’t
need confirmation for this rally). Here you have the spreadsheet containing the
calculations.
The spreadsheet below displays the decline underwent
by each index from the primary bull market highs to the secondary reaction lows.
A full-fledged secondary reaction decline.
Here you have one chart displaying market action since
the 12/24/2018 primary bear market lows, which includes capitulation day, the
subsequent signaling of a cyclical bull market, the top, and the secondary
reaction (red oranges).
 |
| Big picture of the full primary bull market swing |
The chart below is a close up of the current secondary
reaction (red rectangles) and the rally (blue rectangles) that ensued which has setup US stocks
for a primary bear market. If the blue horizontal lines got jointly broken up,
the primary bull market would be reconfirmed and we will declare the ongoing
secondary reaction as extinguished. If the red horizontal lines got jointly
violated, a primary bull market would be signaled. So now we just have a binary
outcome: Either reconfirmation of the bull market or new primary bear market.
 |
| The ongoing secondary reaction and subsequent rally that setup US stocks for primary bear market |
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.
Furthermore, currently SLV and GLD setup for a primary
bear market signal as was explained here.
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
Furthermore, currently SIL and GDX setup for a primary
bear market signal as was explained here.
Sincerely,
The Dow Theorist
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