No secondary (bullish) reaction for stocks against primary bear market yet
US STOCKS
The primary and secondary trend is bearish, as explained here:
Here is an additional post concerning the likely decline to follow primary bear markets signals:
On February 11, 2016 the Industrials and SPY violated their January 20 closing lows. So the primary bear market seems quite entrenched.
GOLD AND SILVER
The primary trend is bearish as explained here.
The secondary trend turned bullish on January 26, as explained here
No pullback has qualified in extent in order to set up SLV and GLD for a primary bull market. So we have to wait.
GOLD AND SILVER MINERS ETFs
The primary trend is bearish, as explained here.
The secondary trend is bullish (secondary reaction against the primary bear market). If we content ourselves with just 10 days (2 weeks) for a secondary reaction to be declared, then the secondary reaction was signaled on February 3. If we require 3 weeks of ascending prices (15 trading days) as per “classical” Dow Theory then the secondary reaction was signaled on February 11, 2016. The extent requirement has been amply fulfilled (even after adjusting for volatility). No setup for primary bull market signal has materialized yet, as we have not witnessed a pullback of a minimum of two days.
If the torrid rally continues, we could be faced with a primary bull market signal even in the absence of a pullback of at least two days. We should recall Rhea’s “alternative” primary bull/bear market signal, namely, the highs (lows) of the last completed secondary reaction. More about this often neglected signal, here.
I have displayed with red horizontal lines the closing highs of the last completed secondary reaction (that is the “alternative” Rhea primary bull market signal levels). As you can see GDX has broken out above its last completed secondary reaction closing highs. However, SIL has failed to confirm, and hence, even if we apply Rhea’s “alternative” primary bull market signal, we cannot declare the primary trend as bullish. Thus, we have to wait.
Here you have an updated chart
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| Strong secondary reaction for SIL and GDX |
Sincerely,
The Dow Theorist
