Monday, June 27, 2022

Dow Theory Update for June 27: Primary bear market signaled for GDX & SIL on 6/23/22

Gold and Silver remain in a primary bull market

GOLD AND SILVER MINERS ETFs

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

In my 6/16/22 post, I explained that on 6/14/22, GDX had broken downside, its 5/12/22 secondary reaction low (pullback) unconfirmed by SIL. On 6/23/22, SIL confirmed by breaking down below its 5/12/22 secondary reaction closing lows, thereby providing confirmation and signaling a primary bear market.

Precious metals and their miners ETFs are very prone to false breakouts. Given that, at least for the time being, GLD and SLV have not confirmed and remain in a primary bull market, I wouldn’t be surprised to see a whipsaw. It is good to remember that despite being choppier, the Dow Theory vastly outperformed buy and hold when applied to GDX & SIL, as explained here. 

The Table below contains all the price action that led to the current primary bear market signal:

 

 

The charts below display the current situation. The red horizontal lines highlight the secondary reaction closing lows whose breakdown signaled the primary bear market. 

 

 B) Market situation if one sticks to the traditional interpretation demanding at least three weeks of movement to declare a secondary reaction.

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

 

SIL had made several lower lows unconfirmed by GDX.  On 6/14/22, GDX made lower lows, and confirmed SIL. Therefore, the primary bear market has been reconfirmed.

Now both the primary and secondary trend is bearish.

GOLD AND SILVER 

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

The primary trend was signaled as bullish on 11/11/21, as I explained here. Despite the current pullback, the trend remains bullish.

The technical situation I discussed in my 6/16/22 post has not changed. So the secondary trend is bearish (secondary reaction).

B) Market situation if one sticks to the traditional interpretation demanding at least three weeks of movement to declare a secondary reaction.

The primary trend was signaled as bullish on 3/1/22, as was explained here.

The technical situation I discussed in my 6/16/22 post has not changed. So the secondary trend is bearish (secondary reaction).

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. The red color displays a primary bear market, and the blue displays a primary bull market.

 

Sincerely,

Manuel Blay

Editor of thedowtheory.com

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