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
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