Dow Theory Update for December 28: Primary bull market for SIL and GDX signaled on 12/27/23

 

The table below summarizes the current state of the trend for the precious metals and their ETF miners. 

 

There's a buzz in the air about the USD. Precious metals making notable strides, the Swiss Franc following suit, and both stocks and crypto appear overextended but with a clear eagerness to climb further.

General Remarks:

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

GOLD AND SILVER MINERS ETFs

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

The primary trend for GDX and SIL turned bearish on 6/20/23. You may find an in-depth explanation HERE.

Following the 10/4/23 bear market lows, a rally unfolded that qualified as a secondary reaction, as explained HERE.

The setup for a primary bull market was explained in our 12/11/23 post.

On 12/19/23, SIL surpassed its secondary reaction highs (step #2 in the Table below). On 12/27/23, GDX confirmed, thus triggering a new primary bull market (Step #4).

 

So, the primary and secondary trends are now bullish. Finally, the miners are in sync with the precious metals. Such multimarket and multi-asset confirmation normally reinforces the bullish case.

The charts below show the most recent price action. The blue rectangles highlight the secondary reaction that started off the 10/4/23 bear market lows and ended on 12/1/23. The brown rectangles indicate the pullback that set up both ETFs for a primary bull market. The blue horizontal lines mark the 12/1/23 closing highs, which were the relevant price levels to be broken up. Additionally, past rallies amid the bear market, failing to meet the criteria for a secondary reaction, are represented by grey triangles.

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

I explained HERE, the primary trend was signaled as bearish on 6/20/23.

In this specific instance, the trend appraisal using the “long-term” version of the Dow Theory yields the same results as the “short-term” one. So, what I explained above applies fully to this section. The primary and secondary trend are bullish. 

Sincerely,

Manuel Blay

Editor of thedowtheory.com

 

 

 

 

 

 

Dow Theory Update for December 27: Trend following works with crypto. Interview.

 I thank Alexandra Overgaag and David Fernandez for having me on Thrilld Labs,  a free and open-access business app that allows Web3 projects, professional investors, developers, and Web3 service providers from around the world to find each other and talk synergies in a streamlined manner.

In the interview, I showed that trend-following can also be successfully applied to crypto, and a simple trend-following system would have paralleled BTC’s performance with a huge drawdown reduction and being in the market only 26.31% of the time. You can watch the video HERE. 

 

 

Sincerely,

Manuel Blay

Editor of thedowtheory.com

Dow Theory Update for December 12: Setup for a potential primary bull market in SIL and GDX completed on 12/11/23

 

General Remarks:

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

GOLD AND SILVER MINERS ETFs

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

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

The primary trend for GDX and SIL turned bearish on 6/20/23. You may find an in-depth explanation HERE.

Following the 10/4/23 bear market lows a rally unfolded that qualified as a secondary reaction, as explained HERE.

This rally stopped on 12/4/23, and a pullback followed that lasted >=2 days and exceeded the Volatility-Adjusted Minimum Movement (more about the VAMM HERE) on at least one ETF to set up GDX and SIL for a potential primary bull market signal. We don't require confirmation When dealing with this kind of “setting up” pullback, as I explained in depth HERE.  Such a pullback set up both ETFs for a potential primary bull market signal. The Table below displays the relevant dates and prices:

 

Therefore, now we have the following options:

1. A primary bull market will be signaled if GDX and SIL jointly surpass their 12/4/23 closing highs.

2. If GDX and SIL continue going down and jointly break down below their 10/4/23 bear market lows, the primary bull market setup would be canceled, the secondary reaction terminated, and the primary bear market would be reaffirmed.

The charts below show the most recent price action. The blue rectangles display the current (bullish) secondary reaction against the still-existing primary bear market. The brown rectangles highlight the current pullback. The blue horizontal lines show the secondary reaction highs (Step #2), whose breakup would signal a new primary bull market, and the red horizontal lines highlight the bear market lows (Step #1), whose breakdown would reaffirm the bear market. The grey rectangles show rallies that did not qualify as a secondary reaction (and hence are ignored).

 

So, the primary trend remains bearish, and the secondary one is bullish (secondary reaction).

 

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

I explained HERE, the primary trend was signaled as bearish on 6/20/23.

In this specific instance, the trend appraisal using the “long-term” version of the Dow Theory yields the same results as the “short-term” one. So, what I explained above applies fully to this section. The primary trend remains bearish and the secondary one is bullish. 

Sincerely,

Manuel Blay

Editor of thedowtheory.com