Dow Theory Update for July 5: Bear market for gold and silver signaled on 6/30/2022

U.S. bonds are in a secondary reaction against the primary bear market. A post will follow soon.

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. In my June 16^th, 2022, post I explained that the setup for a primary bear market had been completed. On 6/14/22, GLD closed @168.57 and broke down below its 5/13/22 secondary reaction lows. On 6/30/22, SLV confirmed and closed @ 18.64 below its 5/12/22 secondary reaction lows, signaling a primary bear market.

The table below contains all the details from the last bull market highs (step #1), the secondary reaction (step #2), the setup for the bear market signal (step #3) and the final breakdown (step #4):

 

The charts below show the most recent price action. The brownish rectangles display the secondary reaction against the then-existing primary bull market. The violet rectangles indicate the rally that set up both precious metals for a primary bear market. The red horizontal lines highlight the secondary reaction closing lows, which were the relevant points to be broken downside for a primary bear market signal.  

 

 

Therefore, the primary and secondary trend are bearish.

 

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. 

In my 6/16/22 post, I explained that a secondary reaction developed against the primary bull market. I also explained that the setup for a primary bear market had been completed. 

On 6/14/22, GDX broke down below its 5/12/22 secondary reaction closing lows unconfirmed by SIL (Step #4). On 6/30/22, SLV confirmed and closed @ 18.64 below its 5/12/22 secondary reaction lows, signaling a primary bear market.

The Table below contains all the details from the last bull market highs (step #1), the secondary reaction (step #2), the setup for the bear market signal (step #3) and the final breakdown (step #4):

 

 

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 6/23/22, as explained here. The secondary trend is also bearish.

 

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. The secondary trend is also bearish.

 

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.

When taking a long-term view the Dow Theory applied to GLD/SLV and GDX/SIL vastly outperforms Buy and Hold (outperformance & drawdown reduction), as explained here.

 

Sincerely,

Manuel Blay

Editor of thedowtheory.com