Precious metal under full-fledged secondary reaction against primary bull market
US STOCKS
A primary bear market for
US stocks was signaled on August 14th, 2019 as explained here.
A secondary reaction
against the primary bear market was signaled on August 30, as explained here.
The setup for a primary
bull market (rally after the secondary reaction) was completed on 09/19/2019 as
was explained here
From 09/19/2019 US stock
indices have been hesitant neither the secondary reaction closing highs nor the
last lows of the primary bear market have been broken. All in all, we have to
wait, and in the meantime the primary trend as per Schannep’s Dow Theory
remains bearish.
Here you have an updated
chart. The blue horizontal lines display the secondary reaction highs which are
the relevant levels to be broken up so that a primary bull market is signaled.
US indices are near the blue lines but not there yet.
As to the Rhea/Classical
Dow Theory there are no changes. The primary trend remains bullish (as
explained here)
The secondary trend is
bearish, as 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 23rd, 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
The primary trend is bullish. If the red horizontal lines were jointly violated, a primary bear market would be signaled |
Bottom line: The primary and secondary trend is very indecisive. If
we take the somewhat larger time frame of the “Rhea/classical” Dow Theory the
primary trend is bullish whereas the secondary trend is bearish. The exact
opposite is the reading when applying Schannep’s Dow Theory (which due to its
definition of secondary reaction which requires less time and extent, tends to
be slightly shorter term oriented). So we are at crossroads. Furthermore, as I
mentioned above, when applying the classical Dow Theory we have seen a bullish
breakout unconfirmed and a bearish breakdown unconfirmed another sign of
indecision.
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 09/04/2019 SLV and GLD
made its last recorded primary bull market closing highs. From that date both
ETFs declined and the secondary trend turned bearish (secondary reaction
against the primary bull market) as explained in-depth here.
GOLD AND SILVER MINERS ETFs
The primary trend is
bullish since 12/18/2018 as explained here. No changes.
On 09/04/2019 SIL and GDX
made its last recorded primary bull market closing highs. From that date both
ETFs declined and the secondary trend turned bearish (secondary reaction against the primary bull
market) as explained in-depth here.
From 09/30/2019 to
10/08/2019 both ETFs staged a rally. That rally, however, lacked the necessary
amplitude to setup SIL and GDX for a primary bear market signal (such a rally
is highlighted with a green rectangle on the charts below). From that minor
rally highs both ETFs declined and extended the secondary reaction by making
lower lows on 10/15/2019 (big orange rectangle on the right side of the
charts). From that date there was a three trading days rally. Such a rally felt
short of the minimum volatility-adjusted requirement in order to set up both
ETFs for a primary bear market signal, as shown on the spreadsheet below. More
about volatility adjustments here. Hence we have a full-fledged secondary
reaction.
Sincerely,
The Dow Theorist
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