Trends unchanged for precious metals and in Schannep's Dow Theory.
US STOCKS
Under Schannep’s Dow Theory
The primary and secondary
trend turned bullish on October 25th, 2019, as was explained here and here. The three US stock indices continue making higher
highs, now with the Transports joining the parade. As of this writing we are
far from a secondary reaction. As Schannep is fond of saying, now stocks are “in
the clear”.
Here you have an updated
chart:
 |
| A primary bull market which has not had a secondary reaction yet |
Under the Rhea/Classical
Dow Theory
If we appraise the trend
under the “Rhea/classical” Dow Theory, the primary trend is bullish since April
1st, 2019, as was explained here
The secondary trend is now
bullish, as the Transport bettered on January 14, 2019 their secondary reaction closing highs (of
04/29/2019) hence confirming the Industrials. The primary bull market has been reconfirmed.
All in all, now both the
primary and secondary trend is bullish.
Here you have an updated chart:
 |
| After a long lag, the Transports finally confirmed the Industrials. |
Some "blame" the roaring bull
market on QE. Maybe they are right but I feel this is immaterial. For whatever
reason there is demand and stocks are bid, and hence there is a bullish trend.
It is not the object of the Dow Theory to determine the “morality” of trends,
but, rather, to timely detect the change of a trend.
GOLD AND SILVER
The primary trend and secondary trend was signaled as
bearish on 11/07/2019 as was profusely explained here
The secondary trend is bullish (secondary reaction
against the primary bear market) as was profusely explained here.
Here you have an updated chart:
 |
| GLD bettered its primary bull market highs unconfirmed by SLV. Primary bear market continues |
GOLD AND SILVER MINERS ETFs
The primary trend is
bullish since 12/18/2018 as explained here. No changes. This specific signal is now more than
one year old. Hence, we are dealing with a trade whose duration seems quite in
line with what is to be expected under the Dow Theory (trades lasting more than
one year on average, please mind the word “on average”).
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. The secondary reaction closing lows were jointly made
on 10/15/2019
On 10/25/2019 the setup for
a primary bear market has been completed as explained here
From that date GDX flirted
with violating its secondary reaction closing lows which it did not. SIL was
much stronger and has hitherto remained at a safe distance of those lows.
On 12/24/2019 SIL bettered
its primary bull market closing highs unconfirmed
by GDX. (blue arrow on the right side of the upper chart). Hence, we cannot
declare the secondary reaction as extinguished. Thus, we remain in a primary
bull market with an ongoing secondary reaction.
Here you have an updated
chart:
 |
| GDX is not confirming SIL. We cannot declare the secondary reaction as ended |
US INTEREST RATES
As it was explained here, TLT and IEF (two ETFs that relate to US interest
rates) are in a bull market (since 12/18/2018 or 11/19/2018 depending on the
way one appraises the secondary reaction). I also explained that they are
currently under a secondary reaction.
If you look carefully at
the charts below you will see two different kind of rectangles superimposed.
The orange and larger ones display the secondary reaction. The green and
shorter ones display the first pullback which did not manage to fulfill the
time requirement, and hence did not reach the status of a secondary reaction.
This is why I highlight them but don’t “code” them with the color given the
bearish secondary reactions (orange).
Off the 11/08/2019 closing
lows (secondary reaction lows) both ITFs rallied for several days. TLT rallied
+4.61% (blue rectangle) which amply exceeds the volatility adjusted requirement
for a minimum movement (which stands at 2.87%). Since it is only necessary that
one index fulfills the minimum movement for the rally that follows the lows of
the secondary reaction, we can declare that the setup for a primary bear market
has been completed. However, “setup” is not the actual signal. Both ETFs have
to violate their secondary reaction closing lows (red horizontal lines) for a
primary bear market to be declared.
On 12/23/2019 IEF violated
its secondary reaction closing low unconfirmed
by TLT. This lack of confirmation entails that no primary bear market was
signaled. All in all, we remain in a primary bull market which is currently
undergoing a secondary (bearish) reaction.
Here you have an updated
chart.
 |
| The secondary reaction against the primary bull market continues |
Sincerely,
The Dow Theorist
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