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