Dow Theory Update for September 29th: Primary bear market signaled on 9/28/21 for US bonds

Primary bear market in precious metals reconfirmed for GLD and SLV

 

In the next few days, I plan to write an in-depth post concerning US bonds. For now, it suffices to say that on 9/28/2021, a primary bear market was signaled when one appraises secondary reactions not bound by the three weeks dogma. When one takes the longer-term view (at least three weeks for a secondary reaction to exist), the primary trend remains bullish, and we have just entered a secondary reaction.

GOLD AND SILVER MINERS ETFs

 

General Remarks:

 

In this post, I provided a thorough explanation concerning the rationale behind my use of two alternative definitions to appraise secondary reactions.

A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.

 

GOLD AND SILVER MINERS ETFs

 

A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.

The primary trend was signaled as bearish on 8/6/2021, as was explained here.

 

The secondary trend was signaled as bullish on 9/3/2021, as was explained here.

 

Off their 3/9/2021 secondary reaction highs, both ETFs declined. SLV broke down below its 8/20/2021 primary bear market lows on 9/16/2021. GLD broke downside its 8/9/21 closing lows on 9/29/21. Accordingly, the primary bear market has been reconfirmed, and the secondary reaction canceled. Thus, both the primary and secondary trend is bearish.

 

Below the updated table containing the relevant data:

Remark: As you can read here, my real-time application since 2012 of the Dow Theory to gold and silver yielded promising results (less drawdown and more performance than Buy & Hold). However, I would not be surprised to see even better results if we used three ETFs (i.e., GLD, SLV and GDX), as it is likely that we would have more signal and less noise. So maybe the final word about applying the Dow Theory to precious metals has not been said yet, as I aim to do even better.

 

Below updated charts. The dark blue circles or ellipses display days with divergence (one ETF closed up while the other one closed down). I always keep an eye on divergences. Depending upon context divergences may help us pinpoint the end of a move, as we did in July 2020 for precious metals). In our current juncture, all divergences popped up during rallies, thereby casting some doubt about the health of the advance.

 

 

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.

The secondary trend was bullish, as was explained here.

The secondary reaction against the primary bear market was finally ended on 9/17/21 when SLV violated its 11/30/2020 @21.05 bear market lows. By closing below such lows, SLV finally confirmed GLD, which had broken down below its 11/30/2021 bear market lows on 2/17/2021. So, the primary bear market has been reconfirmed, the secondary reaction has been terminated, and the secondary trend is now bearish.

 

GOLD AND SILVER MINERS ETFs

 

A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.

 

The primary trend was signaled as bearish on 8/9/2021, as was explained here.

The secondary trend was signaled as bullish on 9/3/2021, as was explained here.

 

On 9/20/21 both GDX and SIL broke downside their 8/20/21 bear market lows, so the primary bear market was reconfirmed and the secondary reaction canceled. Accordingly, both the primary and secondary trend is bearish.

 

Here you have an updated chart:

 

 

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 8/9/2021, as was explained here.

 

Off the Bear market lows (8/20/21 @30.85 and 8/20/21 @37.44 for GDX and SIL, respectively) there was a ten trading days rally until 9/3/21 which did not qualify as a secondary reaction, since we require at least 15 days. On 9/20/21 both GDX and SIL broke downside their 8/20/21 bear market lows so the primary bear market continues. As of this writing both ETFs are flirting with newer lows.

 

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 (absent) displays a primary bull market.

 

Sincerely,

Manuel Blay

Co-Editor of thedowtheory.com

Dow Theory Update for September 23: Primary bear market for GLD and SLV reconfirmed when one takes the longer-term view

Trends for SIL & GDX unchanged.

 

GOLD AND SILVER MINERS ETFs

 

A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.

 

GOLD AND SILVER MINERS ETFs

 

A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.

The primary trend was signaled as bearish on 8/6/2021, as was explained here.

 

The secondary trend was signaled as bullish on 9/3/2021, as was explained here.

 

Off their 3/9/2021 secondary reaction highs, both ETFs declined. SLV broke down below its 8/20/2021 primary bear market lows on 9/16/2021, and continued lower until 9/20/2021 @20.59. GLD refused to confirm and stopped its decline on 9/17/2021 @163.77. Thus, a lower low by SLV unconfirmed by GLD  does not change our assessment of the trends. The primary trend remains bearish and the secondary one bullish (secondary reaction). If GLD confirmed SLV by breaking down below its 8/9/2021 bear market lows, then both the primary and secondary trend would be bearish.

 

Below the updated table containing the relevant data:

 

 Remark: As you can read here, my real-time application since 2012 of the Dow Theory to gold and silver yielded promising results (less drawdown and more performance than Buy & Hold). However, I would not be surprised to see even better results if we used three ETFs (i.e., GLD, SLV and GDX), as it is likely that we would have more signal and less noise. So maybe the final word about applying the Dow Theory to precious metals has not been said yet, as I aim to do even better.

 

Below updated charts. The dark blue circles  or  ellipses display days with divergence (one ETF closed up while the other one closed down). I always keep  an eye on divergences. Depending upon context divergences may help us pinpoint the end of a move, as we did in July 2020 for precious metals):

 

 

B) Market situation if one sticks to the traditional interpretation demanding more than three weeks of movement in order to declare a secondary reaction.

 

There have been changes.

 

The primary trend was signaled as bearish on 11/27/2020, as was explained here.

The secondary trend was bullish, as was explained here.

The secondary reaction against the primary bear market was finally ended on 9/17/21 when SLV violated its 11/30/2020 @21.05 bear market lows. By closing below such lows, SLV finally confirmed GLD, which had broken down below its 11/30/2021 bear market lows on 2/17/2021. So, the primary bear market has been reconfirmed, the secondary reaction has been terminated, and the secondary trend is now bearish.

 

Here you have an updated chart:

 

 

As to SIL and GDX, I don’t have much time left until the end of the month, as I am immersed in drafting our monthly Letter to Subscribers. Lower confirmed lows have reconfirmed the primary bear market on both SIL and GDX. My latest assessment for SIL and GDX, which, basically, has not changed here.

 

I also see a very interesting pattern on TLT and IEF (US interest rates). We are approaching a moment of truth. IEF made  lower lows several times unconfirmed by TLT.  My most recent assessment, which is not fully updated here.

Sincerely,

Manuel Blay

Co-Editor of thedowtheory.com

 

Dow Theory Update for September 7: Secondary reaction against the primary bear market for SIL and GDX

 

US stocks under a secondary reaction as per the “classical” Dow Theory

 

GOLD AND SILVER MINERS ETFs

 

A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.

 

The primary trend was signaled as bearish on 8/9/2021, as was explained here.

 

On 8/20/2021, SIL and GDX made their last recorded lows. Off such lows a rally followed until 9/3/2021 which lasted 10 trading days. As to the extent, as you can see in the table below, both precious metals have amply exceeded the volatility-adjusted minimum movements (VAMM). More about VAMM here.

 

 

So we can declare the existence of a secondary reaction as both the time requirement (10 confirmed trading days is enough) and the extent requirement (both precious metals are above their respective VAMM) have been met. Therefore, the secondary trend is now bullish.

 

Below the charts showing the most recent developments: The breakdown of the secondary reaction lows (red horizontal lines) that resulted in a primary bear market signal, and the most recent rally (blue rectangles on the right side of the charts) that qualifies as a secondary reaction against the ongoing bear market. The small grey rectangles inside the orange rectangles (sec. reaction) display rallies that did not reach the necessary extent to set up the ETFs for a bear market signal. By the way, my thanks to Jack Schannep, who suggested a change in the layout of my charts. Do you like them better?

 

  

Remark: As you can read here, my real-time application since 2012 of the Dow Theory to GDX and SIL yielded promising results (less drawdown and more performance than Buy & Hold). However, I would not be surprised to see even better results if we used three ETFs (i.e., GDX, SIL and GDXJ), as it is likely that we would have more signal and less noise. So maybe the final word about applying the Dow Theory to precious metals has not been said yet, as I aim to do even better.

 

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 8/9/2021, as was explained here.

 

Given that the rally off the primary bear market lows has lasted only 10 trading days, we are still far from 15 trading days, so no secondary reaction has been signaled. The secondary trend remains bearish too.

 

US INTEREST RATES

 

No time to write extensively. Watch the 8/12/21 closing lows for TLT and IEF. IEF broke them down today. TLT refused to confirm. Tomorrow’s price action may be important. I hope to write a post in the next few days.

US STOCK INDEXES

 

Under the “classical/Rhea” Dow Theory, I spot a secondary reaction against the primary bull market. Charts and a more profound explanation will follow in the next few days.

 

Sincerely,

Manuel Blay

Co-Editor of thedowtheory.com