This setup pertains to the long-term version of the Dow Theory
1. As a reminder, gold and silver have been in a primary bull market since, as I explained HERE.
2. The shorter-term appraisal of the trend for SIL and GDX has been bullish since 11/10/22, as I explained HERE.
3. The longer-term appraisal of the trend for SIL and GDX remains bearish, but the setup for a potential primary bull market signal was completed on 12/19/22. So, to turn conclusively bullish, I'd like to see this trend becoming bullish too. We are at a make-or-break moment for the precious metals miners.
4. A break-up of the 12/1/22 (GDX) and 12/2/22 (SIL) closing highs would be a very bullish development.
GOLD AND SILVER MINERS ETFs
A) Market situation if one appraises secondary reactions not bound by the three weeks dogma.
I explained HERE that the primary trend was signaled as bullish on 11/10/22.
The secondary trend changed to bearish (secondary reaction against the bull market). Following the 12/1/22 (GDX) and 12/2/22 (SIL) closing highs, both ETFs dropped until 12/19/22 for 12 and 11 trading days, respectively, which satisfies the time requirement (at least 10 confirmed trading days). Percentage-wise the pullback also met the extent requirement, as the decline amply exceeded the Volatility-Adjusted Minimum Movement (VAMM). More about the VAMM here.
The Table below displays the most recent price action that led to the development of the secondary reaction:
Following the 12/19/22 closing highs, a rally ensued,
which, until now, does not meet the VAMM, and hence no setup for a potential
primary bear market signal has yet to be completed.
The charts below highlight the rally that started off 9/26/22 closing lows (blue rectangles), the new primary bull market signal (blue arrow), and the most recent pullback (secondary reaction, brown rectangles). The grey rectangles on the right side display the most recent rally, which lacks the extent to set up GDX and SIL for a primary bear market signal.
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.
Starting off the 9/26/22 closing lows, a rally ensued that qualifies as a secondary (bullish) reaction against the primary bear market, as I explained HERE.
the 12/1/22 (GDX) and 12/2/22 (SIL) closing highs, both ETFs dropped until
12/19/22 for 12 and 11 trading days, respectively. Such a pullback lasting
>=2 trading days and exceeding the VAMM sets up GDX and SIL for a potential
bull market signal.
The table below displays the price action following the 9/26/22 primary bear market lows:
The charts below highlight the rally that started off 9/26/22 closing lows (blue rectangles). Such a rally qualifies as a secondary reaction against the primary bear market. The brown rectangles show the most recent pullback that set up GDX and SIL for a potential primary bull market signal. The grey rectangles highlight pullbacks that, for lack of extent, did not complete the setup for a bear market signal. The blue horizontal lines display the price levels to be broken up to trigger a new primary bull market.
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