Monday, November 27, 2023

Dow Theory Update for November 27: Primary bull market for gold and silver signaled on 11/27/23

The trend for gold and silver miners’ ETFs remains bearish

 

General Remarks:

In this post, I thoroughly explained the rationale behind using two alternative definitions to appraise secondary reactions.

GOLD AND SILVER

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

 I explained HERE that gold and silver have been in a primary bear market since 6/21/23.

Following a secondary reaction, a pullback set up GLD and SLV for a primary bull market signal, as I explained HERE.

On 11/15/23, SLV surpassed its 10/20/23 secondary reaction highs (Step #2 in the Table below), unconfirmed by GLD. So, absent confirmation, no bull market was signaled. On 11/27/23, GLD finally confirmed by breaking topside its 10/27/23 closing highs (Step #4) , and, accordingly, a primary bull market was signaled. Now, both the primary and secondary trends are bullish.

The Table below contains the details of the price action unfolding from the last recorded bear market lows until 11/27/23 breakup. 

 

The charts below display the most recent price action. The blue horizontal lines highlight the bounce highs (Step #2) which were the key prices to be surpassed to signal a new bull market. The blue rectangles show the secondary (bullish) reaction that unfolded against the then-existing bear market. The brown rectangles highlight the pullback (Step #3) that set up both ETFs for a primary bull market signal. 

 

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

As I explained HERE, the primary trend was signaled as bearish on 6/21/23.

After the 10/5/23 bear market lows (Step #1 in the table below), a bounce followed (Step #2) that satisfied the time requirement for a secondary reaction (at least fifteen trading days confirmed). The extent requirement was also met, as the rally amply exceeded the Volatility-Adjusted Minimum Movement (more about the VAMM HERE). 


So, now we are looking for a >= 2-day pullback that would set up GLD and SLV for a potential primary bull market. Hence, the primary trend is bearish, and the secondary one is bullish.

The charts below display the most recent price action. The blue rectangles show the secondary (bullish) reaction that unfolded against the then-existing bear market.


Sincerely,

Manuel Blay

Editor of thedowtheory.com

Monday, November 20, 2023

Dow Theory Update for November 20: U.S. bonds under a secondary reaction against the still-existing bearish trend

 Despite all the fanfare, the primary trend remains bearish.

 General Remarks:

In this post, I thoroughly explained the rationale behind using two alternative definitions to appraise secondary reactions.

TLT is the iShares 20 years + Treasury bond ETF. More about it here

IEF is the iShares 7-10 years Treasury bond ETF. More about it here.

Thus, TLT tracks longer-term US bonds, whereas IEF tracks middle-term US bonds. A bull market in bonds entails lower interest rates. A bear market in bonds represents higher interest rates.

A) Market situation if one appraises secondary reactions not bound by the three weeks and 1/3 retracement dogma. 

As I explained HERE, the primary trend was signaled as bearish on 9/20/22.

On 9/19/23, IEF penetrated its 10/20/22 primary bear market lows. On 9/21/23, TLT broke down below its 10/24/22 lows, providing confirmation. Accordingly, the primary bear market was confirmed, as I explained more in-depth HERE.

Following the 10/19/23 bear market lows (Step #1 in the Table below), a rally ensued. The rally has been going on for 21 trading days, which satisfies the timer requirement for a secondary reaction. Regarding the extent requirement, TLT and IEF bounced 8.78% and 4.02%, respectively, which amply exceed the Volatility-Adjusted Minimum Movement (more explanations about VAMM here). Accordingly, a secondary (bullish) reaction against the still-existing primary bear market has been signaled. The table below shows you the relevant data:


 So, now we are waiting for a pullback on both ETFs which would set up TLT & IEF for a potential primary bull market signal (Step #3, not market in yellow because we are not there yet). In the meantime, we wait. I noticed that volume has noticeably increased during the rally, which is normally suggestive of just a secondary reaction, not a new bull market. Volume during the pullback, and more importantly after that will give us further indications.

The chart below shows the most recent price action. The blue rectangles highlight the current secondary reaction against the bear market. The red lines show the last primary bear market lows, whose penetration reconfirmed the primary bear market.

 

The Dow Theory has been tracking accurately this bear market (and avoiding losses or making profits for those shorting) as explained HERE and HERE.

B) Market situation if one sticks to the traditional interpretation demanding more than three weeks and 1/3 confirmed retracement to declare a secondary reaction.

The primary trend was signaled as bearish on 9/28/21. A more aggressive and legitimate interpretation would have signaled the bear market on 9/24/21. The explanations here.

In this specific instance, the price action that was explained above fully applies to the “longer term” rendering of the Dow Theory. In other words, look at the table and charts above, as they fully explain what has been going on when we take a longer view. Therefore, the primary trend is bearish and secondary one is bullish.

Sincerely,

Manuel Blay

Editor of thedowtheory.com

Monday, November 13, 2023

Two more interviews with Alessio Rastani on YouTube: Discussing Bitcoin and Silver

Join me in a candid Bitcoin discussion with Alessio Rastani. We explore future price objectives using the Rule of 7 and delve into when market corrections might occur. Check out the full interview by clicking HERE:

https://youtu.be/s3pdphYobi8


 And in the video below, Alessio Rastani and I discuss the current state of the silver market. After rallying from its October lows, silver has experienced a recent pullback, prompting us to analyze whether the silver chart is currently exhibiting bullish or bearish signals.

https://www.youtube.com/watch?v=qtTqVpMOrUo

 

Sincerely,

Manuel Blay

Editor of thedowtheory.com

 

 

Thursday, November 9, 2023

Dow Theory Update for November 11: Setup for a potential Bull market for SLV & GLD completed on November 8.

General Remarks:

In this post, I thoroughly explained the rationale behind using two alternative definitions to appraise secondary reactions.

GOLD AND SILVER

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

 I explained HERE that gold and silver have been in a primary bear market since 6/21/23.

After the 10/5/23 bear market lows (Step #1 in the table below), a bounce followed (Step #2) that satisfied the time requirement for a secondary reaction (at least ten trading days confirmed). The extent requirement was also met, as the rally amply exceeded the Volatility-Adjusted Minimum Movement (more about the VAMM HERE).  

After the bounce, there has been a >=2 day pullback that fulfilled the VAMM on GLD (Step #3). We don't require confirmation When dealing with this kind of “setting up” pullback, as I explained in depth HERE


So, now there are two possible outcomes:

a)    If GLD and SLV jointly surpass the secondary reaction highs (Step #2 in the table above), a new primary bull market will be signaled.

b)    If GLD and SLV jointly pierce their Bear market lows, the primary bear market will be reconfirmed, and the secondary reaction and the bullish setup will be canceled.

The charts below show the price action that started off the Bear market lows (Step #1), the bounce (secondary reaction against the bear market) that followed (Step #2), and the most recent pullback (Step #3) that setup GLD and SLV for a potential primary bull market signal. The red horizontal line highlights the 10/5/23 bear market lows. The blue horizontal line shows the secondary reaction highs (Step #2), whose confirmed breakup entails a new primary bull market.  The blue rectangles highlight the secondary reaction (Step #2) and the brownish ones, the pullback that set up both precious metals for a potential primary bull market (Step #3).

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

As I explained HERE, the primary trend was signaled as bearish on 6/21/23.

The latest rally did not persist for a minimum of 15 confirmed trading days, leading to the absence of a secondary reaction.

Consequently, both the primary and secondary trends remain bearish.

Sincerely,

Manuel Blay

Editor of thedowtheory.com

 

 

 

 

 

 

 

Monday, November 6, 2023

Exploring Market Headwinds and Future Scenarios with Alessio Rastani

 Navigating Stock Market Challenges: Insights from a Recent YouTube Interview

I want to thank Alessio Rastani for having me on his YouTube channel. It was a fantastic experience talking about the current state of the stock market. We covered the two significant challenges that could potentially keep the S&P500 from hitting all-time highs in the near future and delved into various other interesting topics. If you can overlook my Spanish accent, you're welcome to watch the interview by clicking on the link below.

https://www.youtube.com/watch?v=xP3eaH6_X1U

 

Sincerely,

Manuel Blay

Editor of thedowtheory.com