Thursday, August 25, 2022

Dow Theory Update for August 25: Setup for a primary bull market completed for GDX and SIL (precious metals miners’ ETFs)

I am posting before the close so things might change. Readers beware.


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

As I explained here, the primary trend was signaled as bearish on 6/23/22.

Following the 7/25/22 closing lows for both GDX and for SIL, a strong rally followed until 8/10/22 (SIL) and 8/12/22 (GDX). Such a rally qualifies as a secondary reaction as the time and extent requirement for a secondary reaction has been met. GDX rallied for 14 trading days and SIL for 12 days. Percentage-wise, both ETFs amply exceeded the Volatility-Adjusted Minimum Movement (more explanations about VAMM here).

 After the 8/10/22 (SIL) and 8/12/22 (GDX) closing highs, a deep pullback ensued. Such a pullback (2 or more days) sets up both precious metals for a primary bull market signal. The extent requirement for the pullback has also been met as it exceeded in at least one index the VAMM. 

 The Table below contains all the details concerning the secondary reaction (rally) and the pullback that set up both ETFs for a potential primary bull market signal. 


Therefore, now we are confronted with two alternatives:


a) Either the 8/10/22 (SIL) and 8/12/22 (GDX) closing highs are jointly broken topside by GDX and SLV, which will signal a new primary bull market; 


b) or the 7/25/22 closings lows are broken jointly downside, which will reconfirm the primary bear market. 


In the meantime, we wait and observe. 

Below you have the updated charts. The blue rectangles highlight the secondary reaction against the primary bear market. The brownish rectangles show the pullback that set up GDX and SIL for a potential primary bull market signal. The blue horizontal lines highlight the secondary reaction closing highs, which are the relevant levels to be broken up. 


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

On 6/14/22, the primary bear market was re-affirmed (confirmed lower lows). Now both the primary and secondary trend is bearish.

The rally that started off the 7/25/22 closing lows did not reach at least 15 trading days on both ETFs, so we cannot talk of a secondary reaction. Therefore, the primary and secondary trends remain bearish. 


Manuel Blay

Editor of



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