Dow Theory Update for August 30:Secondary reaction for US stocks signaled today

Trends for Gold, silver and their ETFs miners unchanged

US STOCKS

A primary bear market for US stocks was signaled on August 14^th, 2019 as explained here.

The Industrials and S&P 500 stopped their decline on that very day. The Transports further declined until 08/27/2019. From these dates all indeces have rallied making higher highs (since the primary bear market lows) today. Hence, the Industrials and the S&P 500 have been rallying for 12 trading days and the Transports has been rallying for 3 trading days. Thus, the average time of this rally has been: 12+12+3 = 27/ 3 (indices) = 9 trading days.

Furthermore, two indices (the Industrials and the Transports) have been rallying more than 10 calendar days. Hence, the time requirement for the existence of a secondary reaction according to Schannep’s Dow Theory has been met.

As to the extent requirement, all three indices have rallied more than 3% and hence, given that the rally has been confirmed, the extent requirement has been met. The spreadsheet below tells the whole story:

Hence, no sooner has the primary bear market been signaled we are confronted with the first secondary reaction.

The charts below display the current situation. The blue rectangles on the right side of the charts display the ongoing secondary reaction. 

Stocks under a new secondary (bullish) reaction against primary bear market

As to the Rhea/Classical Dow Theory, the primary trend remains bullish whereas we remain in the midst of a secondary (bearish) reaction against that primary bullish trend. The Industrials made higher closing highs bettering their secondary reaction highs unconfirmed by the Transports and, hence, the primary bull market was not reconfirmed and the secondary reaction was not extinguished. On August 23^rd, 2019 the Transports violated their secondary reaction closing lows unconfirmed by the Industrials, and accordingly no primary bear market has been signaled. So the trend of the stocks when appraised under the Classical Dow Theory remains bullish but inconclusive. Lack of confirmation by the Transports prevented both the reconfirming of the primary bull market and the signaling of a primary bear market.

The charts below display the current situation under the “Rhea/Classical” Dow Theory

 

In spite of everything the primary bull market remains bullish as per the Rhea/Classical Dow Theory

Next week I hope to write a post mortem assessment of the last primary bull market. Was it a winner? By how much? Did capitulation improve our timing? More on these aspects soon. Thereafter, a new chapter of the "capitulation" saga should follow.

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.

On June 18^th, 2019 GLD managed to break up above the closing highs of the primary bull market unconfirmed by SLV. Hence, at that time we could not declare the end of the secondary reaction. However, on 07/18/2019 SLV broke up above its hitherto primary bull market highs, and hence the primary bull market has been reconfirmed. From that date both GLD and SLV have made further higher highs. A bull market.

GOLD AND SILVER MINERS ETFs

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

On June 17^th, 2019 GDX managed to break up above the closing highs of the primary bull market unconfirmed by SIL. Hence, we could not declare the end of the secondary reaction. However, on 07/17/2019 SIL broke up above its hitherto recorded primary bull market highs, and the primary bull market was reconfirmed. Since that date both ETFs have been making higher highs. A bull market. 

Sincerely,

The Dow Theorist

Dow Theory Update for August 15: Primary bear market signalled for US stocks on August 14th

Trends for precious metals and their ETF miners unchanged

This post has been amended on 08/16/2019. I thank Jack Schannep for spotting one minor mistake I inadvertently made when determining the total decline of the S&P 500 from the top made on 07/26/2019 to the day the primary bear market was signalled (08/14/2019). I took the secondary reaction closing low (2844.74) instead of the close of the day the primary bear market was signalled (08/14/2019) at 2840.6. What changes is the total percentage decline from the top made at 3025.86 to the bottom which amounts to -6.12% instead of -5.98% (this is the decline from the top to the secondary reaction closing low). My sincere apologies, even though nothing has changed technically: The primary bear market was accurately signalled.

US STOCKS

Yesterday, before the close, I wrote about the setup for a primary bear market which had been completed on 08/08/2019. On 08/12/2019 the Transports violated its secondary reaction closing lows unconfirmed, and hence, no signal was given. However, yesterday, on August 14^th, 2019, both the S&P 500 and the Industrials confirmed the Transports by jointly violating their respective secondary reaction closing lows of 08/05/2019.

Please mind that the primary bear market signal has been signaled at -6.12% from the top made by the S&P 500 on 07/26/2019.

Here you have an updated chart.

Primary bear market signaled on August 14th, 2019

 

As you know, on average, primary bear market signals have follow through. So, while there are no assurances as to much more decline to follow, the odds favor more declines.  The average further decline amounts to ca. 12.5%, which implies that it is more likely than not than further declines, are to be seen. Here is an important post discussing further declines following a primary bear market signal, and what to expect now.

 

As to the “Rhea/Classical” Dow Theory, nothing has changed. There is still a primary bull market and a secondary reaction remains in force. Neither the Industrials nor the Transports have violated the 05/31/2019 secondary reaction lows. Below a chart. The orange rectangles display the ongoing secondary reaction. The red horizontal lines display the lows of the secondary reaction which have to be jointly violated. 

Primary bull market still in force (but with bad looks) as per the 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.

On June 18^th, 2019 GLD managed to break up above the closing highs of the primary bull market unconfirmed by SLV. Hence, at that time we could not declare the end of the secondary reaction. However, on 07/18/2019 SLV broke up above its hitherto primary bull market highs, and hence the primary bull market has been reconfirmed. From that date both GLD and SLV have made further higher highs. A bull market.

GOLD AND SILVER MINERS ETFs

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

On June 17^th, 2019 GDX managed to break up above the closing highs of the primary bull market unconfirmed by SIL. Hence, we could not declare the end of the secondary reaction. However, on 07/17/2019 SIL broke up above its hitherto recorded primary bull market highs, and the primary bull market was reconfirmed. Since that date both ETFs have been making higher highs. A bull market. 

Sincerely,

The Dow Theorist