Monday, February 13, 2023

Dow Theory Update for February 13: Secondary reaction for SIL and GDX signaled on February 10th 2023

The primary trend remains bullish



1. The secondary trend for SIL and GDX turned bearish (secondary reaction) against the primary bull market.

2. Gold and Silver remain some days away for a secondary reaction. Thus, the primary and secondary trends remain bullish (as was explained HERE)

General Remarks:

In this post, I thoroughly explained 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.

I explained HERE that the primary trend was signaled as bullish on 11/10/22.

Following the 1/25/23 closing highs, SIL and GDX have declined for 12 trading days. Hence, the time requirement for a secondary reaction has been fulfilled. As to the extent requirement, as shown in the Table below, it has been also met, as the drop amply exceeds the Volatility-Adjusted Minimum Movement (VAMM, more about it HERE).

So, now have three possible options:

1. if SIL and GDX continue falling and jointly broke downside the 12/19/22 closing lows, a primary bear market would be signaled.

2. If a >=2 days rally that exceeds the VAMM occurs, the setup for a potential Bear market will be completed.

3. If, following the rally described above SIL and GDX continue higher and finally took out the 1/25/23 closing highs, the secondary reaction would be canceled, and the primary bull market would be reaffirmed.

The charts below highlight the price action since 11/10/22, the date when the primary bull market was signaled. As you can see, the secondary reaction (brown oranges in the middle) was successfully terminated by higher highs.  The brown rectangles on the right show the current pullback. The red horizontal lines display the current stop-loss. A joint penetration would signal a new primary bear market. 


Therefore, now we must wait and see what happens in the coming days.

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

HERE I explained that the primary bull market was signaled as bullish on 1/4/23.

The current pullback has not reached the extent requirement (at least 15 trading days). Accordingly, no secondary reaction has been signaled. The primary and secondary trend remains bullish.


Manuel Blay

Editor of







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