Gold and Silver miners have not reconfirmed the primary bear market yet
US Stocks
The SPY, the Transports and
the Industrials closed down and jointly violated
the Oct, 7 secondary reaction closing lows. So, confirmed lower (minor) lows
seem to suggest lower prices. I must stress, though, that I am not in the
business of forecasting the length of secondary reaction. My focus is to gauge
the primary trend which amounts to a time frame of 1-2 years. More about the
average duration of primary trends here.
The primary trend was
reconfirmed as bullish on October 17th, 2013, and November 13th,
2013, March 7th, 2014, and more recently, September 2nd, 2014, for
the reasons given here, here, here and here.
So the current primary bull
market signal has survived four secondary
reactions.
The secondary trend is bearish,
as explained here:
Here you have an updated chart
(the red rectangles display the secondary reaction):
 |
| When will the secondary reaction end? |
Gold and Silver
SLV closed down, and GLD
closed up. The primary bear market wasreconfirmed on October 3rd 2014, as GLD finally broke below the
June 27th, 2013 primary bear market closing lows (something which
SLV had already done on Sept 17, 2014). As
lower lows have been confirmed, the primary bear market has been reconfirmed.
Eventually, the tug of war
between an eternal secondary (bullish) reaction against the primary bear market
and the primary bearish trend has been resolved in favor of the continuation of
the primary trend. The old adage comes to my mind: “don’t fight the trend”.
Well, I am happy that I didn’t
fight the trend and, while reporting the existence of a secondary bullish
trend, I warned my readers that a secondary reaction is not the real thing and
hence, we had to wait until the actual primary bull market signal, which, as we
now see, has failed to materialize.
All in all, my strict
application of the Dow Theory prevented me from become erroneously bullish (as famed
Richard Russell, of the “Dow Theory Letters” wrongly did). We were close to a
primary bull market signal, but being close means nothing under the Dow
Theory.
For the reasons I explained here, and more
recently here the primary trend remains bearish. Of course,
the secondary trend is bearish too.
Here I analyzed
the primary bear market signal given on December 20, 2012. The primary trend
was reconfirmed bearish, as explained here. The
secondary trend is bullish (secondary reaction against the primary bearish
trend), as explained here.
On a statistical basis the
primary bear market for GLD and SLV is getting old. More than one year since
the bear market signal was flashed has elapsed. However, as price action has
just shown, I am extremely skeptical as to the predictive power of statistics.
I prefer price action to guide me, and the Dow Theory tells me that the primary
trend remains bearish until reversed. When will this vicious bear market
end? I don’t know, and I don’t need to know. I only know that the Dow Theory
will see to my being informed punctually when a new primary bull market is
born.
As to the gold and silver miners ETFs, SIL and GDX closed down, SIL
has broken below the primary bear market lows, unconfirmed by GDX. So the primary bear market for SIL and GDX has not been reconfirmed yet.
The primary trend for SIL
and GDX remains, nonetheless, bearish, as was profusely explained here and here.
Sincerely,
The Dow Theorist
