Friday, March 3, 2023

Dow Theory Update for March 3rd: Primary bear market for GDX and SIL signaled on 2/22/23



1. The primary trend for SIL and GDX when using the “short term” version of the Dow Theory turned bearish (secondary reaction) on 2/22/23.

2. If we appraise the trend for SIL and GDX with the “long term” version of the Dow Theory, the primary trend remains bullish and the secondary one bearish.

3. Gold and Silver are in a secondary reaction against the primary bull market (as 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 on 2/13/2,3 SIL and GDX entered a secondary (bearish) reaction against the then-existing primary bull market. In that post, I wrote “if SIL and GDX continue falling and jointly broke downside the 12/19/22 closing lows, a primary bear market would be signaled". Well, the decline continued unabated, and on 2/21/23, SIL broke down below its 12/19/22 lows, and GDX confirmed on 2/22/23.

Accordingly, the primary and secondary trend for GDX and SIL is bearish now.

The charts below give you the most recent price action. 

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.

Following the 1/25/23 highs, GDX and SIL dropped for 21 days until 2/24/23. Accordingly, the time requirement for a secondary reaction was met. As to the extent requirement, GDX dropped 9.74% and SIL 7.11%, which amply exceeds the Volatility-Adjusted Minimum Movement (more explanations about VAMM here). The table below shows the relevant data:

 So, now there are three possible options:

1. if SIL and GDX continue falling and jointly broke downside the 9/26/22 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. On 3/2/23, the current rally has not reached the VAMM, so we have to wait.

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.

Below you have the updated charts. The brownish rectangles highlight the secondary reaction against the primary bull market. The red horizontal line shows the 9/26/22 primary bear market lows, whose penetration would signal a new primary bear market. 


Gold and Silver:

While not the object of this post, the primary trend for GLD and SLV is bullish, as explained HERE.

The table below gives a recap of the primary trend across the precious metals spectrum:



Manuel Blay

Editor of

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