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
