Primary trends remain bullish in precious metals and their ETF miners.
GOLD AND SILVER
A) Market situation if one is to appraise secondary reactions not bound by the three weeks dogma.
While it’s subject to interpretation, I explained why I consider the primary trend bullish since 4/21/2021 here.
The secondary trend is bearish (secondary reaction against the primary bull market) as was explained here.
A setup for a potential primary bear market signal has been completed, as was succinctly explained here:
Well, now let’s explain more in-depth the current setup.
Off the 6/22/2021 secondary reaction lows SIL rallied until 7/2/2021. GLD made its last recorded secondary reaction lows on 6/29/2021. After that, a rally followed until 7/15/2021. The table below gives you all the details:
As you can see, only GLD rallied more than the volatility adjusted minimum movement (VAMM)). However, as I explained profusely here, the setup for a primary bull or bear signal needs not confirmation.
Following its 7/2/2021 rally highs, SLV declined sharply and on 7/16/2021 broke down below its 6/22/2021 secondary reaction lows unconfirmed by GLD. Absent confirmation, no primary bear market was signaled and the primary trend remains bullish.
Now only two outcomes are possible:
a) Either GLD confirms SLV by breaking down below its 6/29/2021 secondary reaction lows, in which case a primary bear market will be signaled.
b) or, both SLV and GLD break topside their respective last recorded primary bull market highs (5/17/2021 @26.19 for SLV, and 6/2/2021 @178.77 for GDX) which would reconfirm the primary bull market.
Below the updated charts:
B) Market situation if one sticks to the traditional interpretation demanding more than three weeks of movement in order to declare a secondary reaction.
The primary trend was signaled as bearish on 11/27/2020, as was explained here.
Off the 11/30/2020 bear market lows, both SLV and GLD rallied for 24 trading days until 1/5/2021. So the time requirement was more than met. As to the extent requirement, it was fully met. Both percentage-wise, as in terms of retracements of the previous bear market swing, which started on 11/6/2020. Please spare me the calculations as the chart patterns speak for themselves.
So the secondary trend is bullish (secondary reaction against the primary bear market).
If we stick to a very strict (or rather misguided) interpretation of the classical Dow Theory, the change of the primary trend from bearish to bullish will occur if either one of the two alternatives below materializes:
1. The first one entails the breakup of the last secondary reaction closing highs (1/5/2021). SLV broke them up on 2/1/2021, unconfirmed by GLD. So, once GLD broke up its 1/5/2021 secondary reaction highs, it’d be indisputable that the primary trend has turned bullish.
2. The second one entails the breakup of the highs of the last completed secondary reaction (the first one of the current bear market). I have written profusely (i.e., here and here) about the importance of the highs/lows of the last completed secondary reaction (not the current one, but the previous one). The closing highs of such a reaction were made on 11/6/2020 for both SLV and GLD. On 12/7/2020, SLV broke up above its closing highs, unconfirmed by GLD. Once GLD confirmed, the primary trend would be bullish.
Below you have the updated charts:
GOLD AND SILVER MINERS ETFs
A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.
The primary trend is bullish since May 7th, 2021, as
explained here.
The secondary trend is bearish, as I explained in my post of June 21st, 2021.
Off the 7/20/2021 secondary reaction lows SIL rallied until 7/29/2021. GDX made its last recorded secondary reaction lows on 7/23/2021. After that, a rally followed until 8/3/2021. The table below gives you all the details:
As you can see, only SIL rallied more than the volatility adjusted minimum movement (VAMM). However, as I explained profusely here, the setup for a primary bull or bear signal needs not confirmation.
So, the setup for a potential primary bear signal has been completed.
Now we only two outcomes are possible:
a) Either both SIL & GDX break down below their respective secondary reaction lows (7/20/2021 @39.54 for SIL, and 7/23/2021 @33.15 for GDX), in which case a primary bear market will be signaled.
b) or, both SIL and GDX break topside their respective last recorded primary bull market highs (6/2/2021 @49.40 for SIL, and 5/17/2021 @39.68 for GDX) which would reconfirm the primary bull market.
Below the updated charts. By the way, the small grey rectangles inside the orange rectangles display rallies that did not met the extent requirement to set up SIL and GDX for a primary bear signal. The read horizontal lines on the right side of the charts display the relevant price levels to be broken down:
B) Market situation if one sticks to the traditional interpretation demanding more than three weeks of movement in order to declare a secondary reaction.
The primary trend is bullish since May 7th, 2021, as explained here.
SIL made its last primary bull market closing high on 6/2/2021. GDX did so on 5/17/2021. Off these highs, SIL declined until 7/19/2021 and GDX until 7/23/2021. The pullback amply met the time and extent requirement for a secondary reaction. Following those lows, there has been a rally that exceeded the MAVM (for SIL, and that’s enough). Thus, the setup for a potential primary bear market signal has been completed. The table below summarizes the current price action:
The charts below display the current situation. The orange rectangles display the current secondary reaction. The blue rectangles on the right side of the charts show the rally that set up SIL and GDX for a potential primary bear market signal. The red horizontal lines (right side of the charts) show the relevant price levels (secondary reaction lows) to be jointly violated for a primary bear market signal:
Overview:
The spreadsheet below displays the primary trend in the pairs SLV/GLD and SIL/GDX when we appraise them with either the “shorter-term” or longer-term interpretation of the Dow Theory. Red color displays a primary bear market (cash), and blue displays a primary bull market.
US INTEREST RATES
The
bull market I described in my post of June 9th, 2021 remains in good
health.The secondary trend remains bullish too (no secondary reaction).
US STOCKS
The Dow Transportation is seriously diverging from the Industrials. Below you have the charts displaying the current situation. Please mind that divergence is more serious than lack of confirmation. In our August 1st Letter at thedowtheory.com, we have dealt in-depth with the issue of divergence.
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